REG - Westmount Energy Ld - Final Results & Notice of AGM
30 October 2020
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the year ended 30 June 2020, and hereby gives notice that the Annual General Meeting of Westmount Energy Limited will be held at No 2 The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel Islands on 11 December 2020 at 11.00.
Copies of the Company's results and Notice of AGM are available on the Company's website, www.westmountenergy.com, and will be posted to shareholders today.
CHAIRMAN'S REVIEW
2020 Highlights
· Supplementary investments made in the prolific Guyana-Suriname Basin where 24 discoveries have been reported since 2015
· Commencement of multi-well, ExxonMobil operated, drilling campaign on the Kaieteur and Canje Blocks - with spud of Tanager-1 in August 2020
· Fundraising (at 13 pence per share) yields £5.57M facilitating additional investment in Cataleya Energy Corporation
· Two 'JHI-WTE share swap' transactions executed at implied Westmount share price of 14.745 pence per share
· Partial repayment of the 2021 10% Convertible Loan Notes capital and interest by way of the issue of new shares at 14.93P per share
· Strong cash balances of £2.4M at year end.
· Focus remains on opportunistic deployment of capital in the Guyana-Suriname Basin
The year under review was another year of progress for your Company as we continued to build our indirect investment exposure to the Guyana-Suriname Basin. After four years of patiently scaling up our investment positions we have now reached the point where the Exxon Mobil drilling programme on the Kaieteur and Canje blocks, offshore Guyana, has commenced, with the Tanager 1 well on the Kaieteur block currently drilling and a further two wells expected on the Canje Block over the next six to nine months. With independent geological risks across 2 different blocks, these 3 ExxonMobil operated wells provide some risk diversification and a portfolio effect. The spudding of an additional exploration well, operated by Tullow Oil, is anticipated in Block 47, Suriname, during Q1 2021. The outcome of these initial 4 wells is likely to determine the follow-on drilling programs and ultimately the value of our investments in JHI Associates Inc., Cataleya Energy Corp. and Ratio Petroleum.
GUYANA-SURINAME BASIN
As reported at the interim stage, Guyana became South America's newest oil producing nation with first oil from the Liza Phase I development being delivered, in December 2019, less than 5 years after discovery. Field production is currently ramping up to its plateau rate of 120,000 barrels of oil per day. Further field developments are underway at Liza Phase II and Payara, where government approval and Final Investment Decision have recently been achieved, with follow-on anticipated projects at Yellowtail and Hammerhead, at various stages of design, engineering and project sanction. In aggregate this pipeline of development projects is reported to offer the potential for Guyana to be producing circa 750,000 BOD by 2026.
Notwithstanding the global economic backdrop, and some COVID-19 related disruption, exploration drilling has also continued apace in the basin. The discovered and potential resource continues to grow, with stacked petroleum systems, emerging new plays and deeper hydrocarbons confirming the upside potential within this prolific basin. During the last twelve months ExxonMobil and partners on the Stabroek Block have reported five additional light oil discoveries (Tripletail-1, Mako-1, Uaru-1, Yellowtail-2, and Redtail-1) with the discovered Stabroek resource inventory now standing at approximately 9 Bn Boe. This brings the total number of discoveries, to date, on the Stabroek Block to 18 from the 20 exploration wells drilled since 2015 (a prodigious success rate of 90%).
In January 2020 Apache and Total reported a substantial, stacked-pay, hydrocarbon discovery (Maka Central-1) which extended the Upper Cretaceous play fairways to the southeast into Block 58, Suriname. This discovery well has been followed up by two further significant stacked-pay discoveries, to the southeast of Maka Central-1, at Sapakara West-1 and Kwaskwasi-1. All three discoveries reported light oil and gas-condensate pay in the shallower Campanian reservoirs overlying light oil pay in deeper Santonian reservoirs. These deeper Santonian pools on Block 58, in conjunction with the deeper hydrocarbons reported at Tripletail-1 and Yellowtail-2, on the Stabroek Block, suggest an extensive emerging deeper play fairway within the basin.
These drilling results continue to support the presence of quality reservoirs, multiple source rocks and multiple phases of hydrocarbon expulsion - indicating the potential for stacked-pay drilling opportunities within the basin. A total of 5 plays have now been proven though the Upper Cretaceous Liza play dominates in terms of number of discoveries and discovered volumes to date.
COVID 19
The COVID 19 pandemic continues to cause significant disruption to global health security and economies - as governments seek to find a balance between addressing public health concerns via restrictions on movement of people versus preservation of economic activity through the injection of economic stimuli. While the immediate impact of the pandemic on the sector resulted in a sharp drop in demand for oil, the reopening of economies has allowed oil prices to recover to around $40-$45 per barrel (Brent) from the record lows earlier this year. Nevertheless, uncertainty remains the order of the day as a second wave of the virus has the potential to retard economic recovery through ad hoc travel restrictions, quarantine and local lockdowns. It is hoped that these temporary measures will 'bridge the gap' and help find the correct balance while we await the arrival of effective therapeutics and a vaccine.
Notwithstanding some initial COVID 19 related disruptions, during the March-May 2020 period, exploration drilling has continued in the Guyana-Suriname Basin. Currently, there are five drillships operating within the basin between development and exploration drilling operations, with four of these drillships operating offshore Guyana. The Tanager-1 well was spudded on the 11th August 2020, using the Stena Carron drillship, and will be the deepest well drilled in the basin to date, with an estimated target total depth of circa 8,000 metres. Continuing drilling activity in the basin is likely to be driven by the industry's focus on 'advantaged barrels' as a result of the unique combination of prospect sizes, reservoir quality, low carbon intensity and low breakeven metrics, available offshore Guyana. These characteristics offer the potential to sustain Guyana as an investment growth area in spite of COVID 19 related issues and general industry headwinds.
JHI Associates Inc ("JHI")
Over the past 6 months Westmount Energy Ltd. ("WTE") has increased its stake in JHI from 3% to 6.9% of the issued share capital through the execution of two JHI-WTE share swap transactions at an implied WTE share price of 14.745 pence. Firstly, during the period, your Company announced, on 13th May 2020, that it had increased its equity position in JHI from approximately 3% to 4.8% via the purchase of 1,350,000 common shares in JHI Associates Inc., by way of the issue of 15,930,000 new ordinary shares of no par value in Westmount. Post the financial year end, on September 10, 2020 Westmount announced that it had purchased a further 1,550,000 common shares in JHI Associates Inc. by way of the issue of 18,290,000 new ordinary shares of no par value in Westmount which brought our holding in JHI to 5,113,770 shares, representing approximately 6.9% of the issued common shares in JHI. As a result of the above transactions, JHI is now our largest investment constituting approximately 61% of Company's portfolio based on the current balance sheet1.
As previously reported, JHI is a private, Ontario-registered, company established in 2014 and focused on oil exploration opportunities in the emerging Guyana-Suriname Basin. The company's main asset is a 17.5% carried interest in the Canje Block covering over 4,800 square kilometres, offshore Guyana. This block is located adjacent to and in the same geologic basin as the Stabroek Block which has delivered eighteen substantial oil discoveries since 2015, with reported discovered recoverable resources of approximately 9 billion oil-equivalent barrels to date.
ExxonMobil, which is the operator of both blocks, acquired in excess of 6,100 km2 of 3D seismic on the Canje Block in 2016. Subsequent processing and interpretation of this dataset has been used to define a substantial prospect inventory on the Block with three prospects (Bulletwood, Jabillo, and Sapote) high-graded as potential targets for the initial drilling campaign. A 2018 DeGoyler McNaughton Competent Persons Report on the Canje Block remains unpublished. However, the block is reported by JHI2 to contain more than a dozen prospects in the Canje portion of the Liza play fairway, representing more than 10 billion barrels of prospective recoverable oil resources, with a number of the prospects exhibiting the same DHI (Direct Hydrocarbon Indicator) characteristics as the neighbouring Stabroek discoveries. As a result of a 2018 farm-out to Total, JHI is carried for the drilling of up to four wells and is funded for the drilling of additional wells.
It is anticipated that the first well on the Canje Block, Bulletwood-1, will be spudded in November/December 2020.The Bulletwood-1 prospect is reported to be a 'Liza look-alike' confined channel complex and will target prospective resources of circa 500 MMbbls3 of oil. The second well on the Canje Block will target either Sapote-1 in the east of the block or Jabillo-1, in the northwest of the block, which is reported as a billion-barrel class basin floor turbidite fan.
1Percentage of current Guyana-Suriname portfolio NAV using financial values reported on Balance Sheet date 30th June 2020 (with post balance sheet share purchases referenced to that date) 2JHI Published Interview - 121Oil & Gas Investment Conference, London, 2018
3JHI Website - www.jhiassociates.com
Cataleya Energy Corporation ("CEC")
During the financial reporting period Westmount acquired an additional 313,500 common shares in Cataleya Energy Corporation ("CEC") for total consideration of US$3,135,000 (equivalent to GBP £2,574,321) including transaction costs. Westmount currently holds a total of 567,185 common shares in CEC, representing approximately 5.35% of the fully diluted share capital of CEC, as of the 30th August 2019.
As previously reported CEC is a private, Canadian registered company established in 2015 and focused on oil exploration opportunities in the emerging Guyana-Suriname Basin. CEC's main asset is a 25% participating interest in the Kaieteur Block, which it holds through its wholly owned subsidiary Cataleya Energy Limited ("CEL"). The 13,500 km2 Kaieteur Block is located outboard of, and adjacent to, the Ranger Oil Discovery which is located on the Stabroek Block, offshore Guyana.
A Netherland, Sewell & Associates Inc.("NSAI") CPR, published in May 2019, provides estimates of the unrisked prospective oil resources in 9 prospects located on the 5,750 km2 3D seismic survey acquired in the southern part of the Kaieteur Block in 2017. This 3D survey covers circa 42% of the total area of the Kaieteur Block. 'Best Estimate' of Unrisked Gross Prospective Oil Resources for individual prospects ranges from 76.1 MMBBLs (Towa-Towa Prospect) to 702.7 MMBBLs (Toucan Prospect). Aggregate 'Best Estimate' Gross Unrisked Prospective Resources for these 9 prospects is 2.1 BnBBLs (Aggregate Low to High Estimates 694 MMBBLs to 5.85 BnBBLs) implying Net (25%) 525 MMBBLs to CEC across the area of the Kaieteur 3D seismic survey.
On 11th August 2020, the Stena Carron drillship commenced operations on location at the Tanager-1 wellsite- the first well selected for drilling on the Kaieteur Block, offshore Guyana.
The Kaieteur Block is currently operated by an ExxonMobil subsidiary, Esso Production & Exploration Guyana Limited (35%), with CEL (25%), Ratio Guyana Limited (25%) and a subsidiary of Hess Corporation (15%) as partners.
Ratio Petroleum Energy Limited Partnership ("Ratio Petroleum")
Your company holds 1,200,000 units in Ratio Petroleum, representing a c .0.7% interest in the issued share capital of Ratio Petroleum which holds a 25% participating interest in the Kaieteur Block, offshore Guyana.
The Tanager-1 well which was spudded on the 11th August 2020, has a target total depth of 8,000 metres and will take an estimated 90 days to drill. It will be the deepest well drilled in the Guyana-Suriname Basin to date. The May 2019 Netherland, Sewell & Associates Inc. ("NSAI") report on the Kaieteur Block describes the Tanager Prospect as a stacked reservoir prospect (Maastrichtian to Turonian reservoir intervals) and assigns a 'Best Estimate' Unrisked Gross (100%) Prospective Oil Resource of 256.2 MMBBLs to the prospect (Low to High Estimates 135.6 MMBBLs to 451.6 MMBBLs), with an aggregate Probability of Geologic Success (POSg) of 72%.
Ratio Petroleum also holds a 20% interest in Block 47 offshore Suriname where operator Tullow is planning to use the Stena Forth drillship to drill the Goliathberg-Voltzberg North-1 ("GVN-1") well, in Q1 2021.The GVN-1 well has a target total depth of 5,400 metres and will take an estimated 60 days to drill. The NSAI report on Block 47, published in June 2019, indicates that the GVN Prospect is a stacked reservoir prospect (Turonian to Cenomanian reservoir intervals) and assigns a 'Best Estimate' Unrisked Gross (100%) Prospective Oil Resource of 234.7 MMBBLs to the prospect (Low to High Estimates 35 MMBBLs to 937.9 MMBBLs), with an aggregate Probability of Geologic Success (POSg) of 34%.
Eco (Atlantic) Oil & Gas ("EOG")
Westmount holds 1,500,000 common shares in EOG representing c 0.8% of the common shares in issue. In addition to a portfolio of Namibian interests, EOG hold a 15% interest in the Orinduik Block offshore Guyana, which is adjacent to the Stabroek Block.
During August and September 2019, Tullow and the Orinduik Block partners reported two heavy oil discoveries (Jethro-1 and Joe-1 respectively) in separate Tertiary age reservoirs. Subsequently, in January 2020, Tullow reported a light oil discovery (Carapa-1), in Upper Cretaceous reservoirs, on the neighbouring Kanuku Block. The commercial potential of these discoveries remains to be fully evaluated.
Westmount originally invested in EOG to gain exposure to the drilling outcomes of the substantial Upper Cretaceous targets on the Orinduik block. The Gustavson Associates CPR, published in February 2020 indicates the presence of at least four Upper Cretaceous prospects on the Orinduik Block that are assessed to individually contain Gross Unrisked Prospective Resources (P50) in excess of 500 MMboe. Tullow and the Orinduik block partners are currently reported to be reprocessing 3D seismic and updating their geologic models by integrating the results of the Jethro-1, Joe-1 and Carapa-1 wells. EOG reported in its mid-year results that it remains fully funded for its pro-rata share of up to 3 wells costing USD $40M each.
Financials
The financial results show an operating loss of £111,493 for the year. As previously announced, in August 2019, £5.573M was raised by way of placings with new and existing shareholders at 13 pence per share. In November 2019 we announced the repayment of £327K of the 2021 10% Convertible Loan Notes ('CLNs') capital and interest by way of the issue of new shares at 14.93P per share. At year end, the outstanding CLNs amounted to £400K. The company remains well capitalised with a low-cost base and had strong cash balances of £2.435M at the year end. The Board continues to be focused on opportunistic deployment of capital to gain additional exposure for our shareholders to the Guyana-Suriname offshore exploration space. We continue to seek a range of opportunities including the scaling of our existing investments where opportunity and price discipline allow.
Summary/Outlook
Westmount is currently well positioned with a focused investment portfolio providing exposure to large Upper Cretaceous prospects and near-term ExxonMobil operated drilling outcomes, in this prolific basin. Results of the Tanager 1 well are expected in November. It is anticipated that drilling operations at Bulletwood-1, the first of two exploration wells on the Canje Block, will follow shortly thereafter. (Given that our investment portfolio is currently weighted towards JHI, our largest investment, the drilling outcomes of these two ExxonMobil operated wells on Canje will be particularly significant for Westmount shareholders). The Tullow operated Goliathberg-Voltzberg North-1 well is scheduled for drilling in Q1 2021. With exposure to the drilling outcomes of this four well portfolio and potential additional exploration drilling dependent on the above well results, the following 6 to 12 months should provide lots of excitement for shareholders. We are hopeful that our strategy of a portfolio approach - with large Upper Cretaceous prospects, independent geological risks and a compressed timeframe for drilling - offers the potential for significant value changes, during the next year, in the success case.
As the only AIM quoted company offering exposure to the ExxonMobil operated drilling programmes on Canje and Kaieteur, Westmount shareholders are uniquely positioned.
We will update shareholders when we have received drilling results from our investee companies and in the interim I wish all shareholders and stakeholders the best of luck.
GERARD WALSH
Chairman
29 October 2020
For further information, please contact:
Westmount Energy Limited www.westmountenergy.com
David King, Director Tel: +44 (0) 1534 823059
Anita Weaver
Cenkos Securities plc (Nomad and Broker) Tel: +44 (0) 20 7397 8900
Nicholas Wells/Harry Hargreaves (Corporate Finance)
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2020
The Directors present their annual report and the audited financial statements of Westmount Energy Limited (the "Company") for the year ended 30 June 2020.
PRINCIPAL ACTIVITIES
The principal activity of the Company is, and continues to be, an energy investment company. Development of the Company's activities and its prospects are reviewed in the Chairman's Review on pages 3 to 6.
The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM").
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the date of this report were as follows:
10% pa. Unsecured Loan Notes
Shares held at
Options held at
30 June 2020
30 June 2020
30 June 2020
G Walsh (Chairman)
£400,000
11,933,565
1,000,000
D R King
-
-
500,000
T P O'Gorman
-
4,650,000
750,000
D Corcoran
-
5,250,000
1,000,000
Since 30 June 2020 Mr Corcoran has been granted a further 750,000 options and at the date of this report holds beneficial interest in 1,750,000 options. See note 19 - Subsequent Events.
RESULTS AND DIVIDENDS
The result for the year is set out on page 16 in the Statement of Comprehensive Income. The Directors do not recommend the payment of a dividend in respect of these financial statements (2019: £Nil).
CHARITABLE DONATION
During the year the Company made a charitable donation to the Guyana Cancer Prevention Society ("the Society") of USD10,000. The donation was used to co-fund Phase 1 of the Society's pilot HPV Virus/Cervical Cancer screening study.
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman, age 57, a Swiss resident, is a member of the Chartered Institute of Management Accountants and has been involved in financing oil and gas companies for over 20 years. Mr Walsh maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector.
David R King, age 62, a Jersey resident, is a Fellow of the Institute of Chartered Accountants in England and Wales and has over 25 years' experience in capital markets and cross border structuring gained from senior positions in a number of offshore jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg and Jersey. He is an experienced professional Non-Executive Director and is regulated personally by the Jersey Financial Services Commission. He maintains his knowledge and skills via fulfilment of regular continuing professional development obligations and by close monitoring of significant market activities within the sector. Mr King acts as an independent director and oversees the efficient operation of Company Secretarial, Registrar and Administrative operations of the Company.
Thomas P O'Gorman, age 68, a Northern Ireland resident, is a long term investor in the resource sector and is the former Chairman of Cove Energy Plc (formerly Lapp Platts Plc) who has been involved in financing oil and gas companies for over 40 years. Mr O'Gorman maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector.
DIRECTORS' REPORT (continued)
FOR THE YEAR ENDED 30 JUNE 2020
Dermot Corcoran, age 61, a Republic of Ireland resident, is a petroleum geologist and geophysicist, with more than 30 years' experience working with both major and minor hydrocarbon exploration companies globally. Mr Corcoran has wide experience in technical and commercial aspects of petroleum exploration and production, gained from employment and investment experience in Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and the USA. Mr Corcoran maintains his knowledge and skills via direct contact
with senior industry investors and other operators, attendance and engagement at industry conferences and seminars and via monitoring of significant market activities within the global energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate Services Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey) Limited, has indicated its willingness to continue in office, and a resolution that it is re-appointed will be proposed at the next annual general meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Jersey Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) and applicable law. Under Company law the Directors must prepare financial statements that give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware and each Director has taken all the steps that he ought to have undertaken as a director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The Company's website is maintained in compliance with AIM Rule 26.
Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with all of the above requirements in preparing these financial statements.
On behalf of the Board
D R KING
Director
29 October 2020
CORPORATE GOVERNANCE
The Board have adopted the Quoted Companies Alliance Corporate Governance Code ("the QCA Code") following the London Stock Exchange's requirement for AIM listed companies to adopt and comply with a recognised corporate governance code.
Strategy and Business Model
The strategy of the Company is to invest in and provide follow on capital to small and medium sized companies which have significant growth possibilities operating in the oil and gas sector. Members of the Board have specialist knowledge and experience in the upstream sector of the oil and gas industry (gained from extensive investing activity over a number of decades) allowing them to identify projects and growth companies with potentially higher returns, commensurate with acceptable levels of risk. The Company undertakes extensive due diligence on potential investment opportunities and monitors performance of its investments via close contact with the companies concerned and analysis of their public announcements and presentations. In common with other investment companies in this sector, access as a minority shareholder to projects and valuable investments is challenging but the Board is confident of its ability to continue to source attractive investment opportunities given close relationships with a number of companies and their management teams, and recognition of the Board's experience and strong network.
Shareholder Relations
The Company engages closely with its principal shareholders, a number of whom are Directors of the Company, primarily via face-to-face meetings and publishes announcements of significant activity consistent with market requirements. Shareholders receive annual and half-year financial statements and are invited to the Company's Annual General Meeting. Contact details for the Company are maintained on the website and on Regulatory News Service announcements. The Board seeks to build strong relationships with its institutional shareholders which are managed by the Chairman and supported by other members of the Board.
Gerard Walsh, Chairman, and Dermot Corcoran, Director, are primarily responsible for shareholder liaison, and can be contacted via the Contact Page on the Company's website.
Stakeholder and Social Responsibilities
The Board has identified its key stakeholders as being its shareholders and investee companies, given it has no employees and a small range of contracted service providers. It maintains contact with shareholders, of whom a significant proportion are Directors, via Regulatory News Service and periodic feedback from these parties. Contact with investee companies is operated via the Chairman and individual Board directors responsible for the relevant investment recommendation, and is geared to key operational, project and transactional cycles identified for the company concerned.
Risk Management
The Company actively monitors and manages risk in its activities, principally through oversight and operation of its investment portfolio. The Company identifies key risks in all of its investments during the selection and due diligence cycle, and subsequent recommendations for investment by the Company consider for each proposal a range of risks and mitigating factors. Identification of these risks is achieved by direct engagement with the companies in which Westmount seeks to invest, close analysis of their market opportunities and threats, combined with detailed knowledge of the market sector where they operate and their competitors.
Board Composition, Evaluation and Decision Making
The Board comprises three shareholder Directors (including the Chairman Gerard Walsh) and one Non-Executive Director (David King) resident in Jersey, who is considered to be independent.
The Company deviates from the requirements of the QCA Code in that it has only one independent non-executive director. The Directors consider that the structure of the Board is appropriate and proportionate for the business at this stage of the Company's growth, and that the Independent Director, in conjunction with the Company's Nominated Adviser, provides appropriate challenge to the executive directors on all corporate governance matters. The Board intends to keep all aspects of its corporate governance - independence and the balance of executive and non-executive roles in particular - under review going forward.
CORPORATE GOVERNANCE (continued)
Board Composition, Evaluation and Decision Making (continued)
Each of the four directors has considerable experience in their respective fields and act collectively in all decision making of the Company. The Board is satisfied that it has a suitable balance between independence on the one hand and knowledge of the Company's activities, to allow it to properly discharge its responsibilities and duties. Directors are expected to use their judgement and experience to challenge and assess the appropriateness of operations and decision making at all times.
The Board has met 8 times this financial year and Directors each dedicate between 12 and 150 days time to the Company per annum.
The Board regularly takes advice from its Nominated Advisor, Cenkos Securities plc, and other external advisors (principally its external lawyers) in relation to periodic investment opportunities and fund raising.
The Board completes an annual self-evaluation of its performance based on externally determined guidelines appropriate to the composition of the Board and the Company's operation, including Board Sub Committees. The scope of the self-evaluation exercise will be re-assessed each year to ensure appropriate depth and coverage of the Board's activities consistent with corporate best practice. The Board has adopted a board effectiveness questionnaire, which assesses the composition, processes, behaviours and activities of the board through a range of criteria, including board size and independence, mix of skills and experience, and general corporate governance considerations in line with the QCA code.
Given the stage of the business' maturity, the responsibilities of a nomination committee are delegated to the Board, and there are no formal succession planning processes in place. The Board intends to keep this under review as the business develops.
Corporate Culture
Westmount Energy supports the growing awareness of social, environmental and ethical matters when considering business practices. These statements provide an outline of the policies in place that guide the Company and its employees when dealing with social, environmental and ethical matters in the workplace.
Code of Conduct
Westmount Energy maintains and requires the highest ethical standards in carrying out its business activities in regard to dealing with gifts, hospitality, corruption, fraud, the use of inside information and whistle-blowing.
Westmount Energy maintains a zero-tolerance policy towards bribery and corruption.
Equal Opportunity and Diversity
Westmount Energy promotes and supports the rights and opportunities of all people to seek, obtain and hold employment without discrimination.
It is our policy to make every effort to provide a working environment free from bullying, harassment, intimidation and discrimination on the basis of disability, nationality, race, sex, sexual orientation, religion or belief.
Joint Venture Partners, Contractors and Suppliers
Westmount Energy is committed to being honest and fair in all its dealings with partners, contractors and suppliers.
Procedures are in place to ensure that any form of bribery or improper behaviour is prevented from being conducted on Westmount Energy's behalf by joint venture partners, contractors and suppliers. Westmount Energy also closely guards information entrusted to it by joint venture partners, contractors and suppliers, and seeks to ensure that it is never used improperly.
CORPORATE GOVERNANCE (continued)
Operating Responsibility and Continuous Improvement
Westmount Energy adopts an environmental policy which sets standards that meet or exceed industry guidelines and host government regulations. This is reviewed on a regular basis. Wherever we operate we will develop, implement and maintain management systems for sustainable development that will strive for continual improvement.
Westmount Energy is committed to maintaining and regularly reviewing its Health and Safety and Environmental Policies.
Periodic feedback from stakeholders, as described in relation to Stakeholder and Social Responsibilities (above), allows the Board to monitor the culture of the Company, as well as its ethical values and behaviours.
Governance Structures
The Board operates to manage and direct the affairs of the Company via close contact between Board members and through both regular scheduled and ad-hoc Board meetings. The Board aims to meet at least quarterly with a timetable set by the external Company Secretary with formal agendas and papers delivered in advance supporting key matters for consideration or approval. Additionally, contact is maintained between the directors via email and telephone given the geographic separation of the Board.
Mr Walsh as Chairman is responsible for setting the strategy of the Company and maintaining performance of the Board in line with the broad objectives set in that strategy. He is responsible for liaison with key stakeholders, including shareholders and prospective investee companies, and also with advisers and regulatory authorities.
Mr King, as a Jersey resident, maintains close contact with the Company Secretary and other contracted service providers from Jersey. The Board does not operate separate sub-committees (Audit, Remuneration or Nomination) given its small size and close contact for key decisions. The Company does not plan to establish new sub-committees for the foreseeable future.
The Board retains full authority for the Company such that all decisions on behalf of the Company are reserved for the Board.
Communication with Stakeholders
The Company communicates with shareholders through the Annual Report and Audited Financial Statements, annual and half year results announcements, the Annual General Meeting, and periodic meetings with significant institutional shareholders and analysts.
Corporate information (including all Company publications and announcements) is available to all shareholders, prospective investors and the public and is maintained on the Company's website, www.westmountenergy.com.
In the last 12 months there were no votes of shareholders where a significant proportion voted against a resolution.
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF WESTMOUNT ENERGY LIMITED
Opinion
We have audited the financial statements of Westmount Energy Limited (the 'Company') as at and for the year ended 30 June 2020 which comprise the Statement of Comprehensive Income, the Statement of Financial Position , the Statement of Changes in Equity, the Statement of Cash Flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards ('IFRS') as adopted by the European Union and the requirements of the Companies (Jersey) Law 1991.
In our opinion, the financial statements:
• give a true and fair view of the state of the Company's affairs as at 30 June 2020 and of its result for the year then ended;
• have been properly prepared in accordance with IFRS as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)'). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of matter
We draw your attention to note 8 and note 15 of the financial statements, which include unlisted investments held by the Company and carried at £10,943,867 (2019: £4,655,621) based on Directors' valuations. These are Level III investments and have been valued based on the recent sales price of the investments and/or using relevant market proxies where available. The Directors have also considered market expectations of future performance of the entity's industry sector, in particular known interest in the area of current exploration, in arriving at their valuations. Our audit opinion is not modified in respect of this matter.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in which ISAs (UK) require us to report to you where:
• the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate, or
• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
• Valuation of Investments. The valuation of the Company's investments is a key driver of the Company's investment return and investments represent a material proportion of the Company's
financial and total assets. The relevant accounting policies and investment composition are disclosed in note 2 and note 8, respectively, to the financial statements.
The investments represent listed and unlisted equity instruments amounting to £1.1 million and
£10.9 million respectively as at 30 June 2020. The identified risk predominantly related to the unquoted investment the valuation of which entails a greater degree of judgement being applied by the Directors. It has been valued based upon the price of recent investments which is a valuation basis included in the International Private Equity and Venture Capital Guidelines (IPEVC Guidelines).
Our main audit procedures undertaken to address the identified risk in respect of the unlisted investment were (a) we discussed with management their unlisted investment valuation methodology, and assessed the recognition and measurement of the unlisted investment held for compliance with IFRSs, and determined whether it had been accounted for in accordance with the
stated accounting policy and with IPEVC Guidelines; and (b) we substantiated the nature and background of recent transactions which had been used as the basis of the valuation.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from material misstatement we define materiality as the level of misstatement that would probably influence the economic decisions of a reasonably knowledgeable person.
The materiality used is based on approximately 2% of gross assets rounded down, or £270,000 (2019: £276,000) which reflects the fact that this is an investment company where its market value is determined predominantly by its net asset value.
An overview of the scope of our audit
During our audit planning, we determined materiality and assessed the risks of material misstatement in the financial statements including the consideration of where Directors made subjective judgements, for example, in respect of the assumptions that underlie significant accounting estimates and their assessment of future events that are inherently uncertain. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole taking into account the Company, its accounting processes and controls and the industry in which it operates.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Chairman's review or the Directors' report.
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or
• returns adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities with regard to the financial statements set out on page 8, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's shareholders as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Jeff Vincent
For and on behalf of Moore Stephens Audit & Assurance (Jersey) Limited
1 Waverley Place
Union Street St Helier Jersey
Channel Islands JE4 8SG
29 October 2020
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Year ended 30 June 2020
Year ended 30 June 2019
Notes
£
£
Net fair value gains on financial assets held at fair value through profit or loss
8
201,252
2,654,137
Net fair value gains/(losses) on financial liabilities held at fair value through profit or loss
Impairment of intangible assets
Finance costs
Administrative expenses
6
7
4
75,419
(33,333)
(54,575)
(301,309)
(183,753)
(66,667)
(79,987)
(229,462)
Share options credit/expense
14
1,053
(80,853)
Operating (loss)/profit
(111,493)
2,013,415
(Loss)/profit before tax
(111,493)
2,013,415
Tax
3
-
-
(Loss)/profit after tax
(111,493)
2,013,415
Other comprehensive income
-
-
Total comprehensive (loss)/profit for the year
(111,493)
2,013,415
Basic earnings per share (pence) continuing and total operations
5
(0.11)
3.83
Diluted earnings per share (pence) continuing and total operations
5
(0.11)
3.51
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
As at
As at
30 June 2020
30 June 2019
Notes
£
£
ASSETS
Non-current assets
Intangible assets
6
-
33,333
Financial assets held at fair value through profit or loss
8
12,079,736
6,745,797
12,079,736
6,779,130
Current assets
Receivables
9
-
7,001
Cash and cash equivalents
10
2,435,664
63,374
2,435,664
70,375
Total assets
14,515,400
6,849,505
LIABILITIES AND EQUITY
Non-current liabilities
Derivative financial instruments
11
-
221,411
Borrowings
11
-
598,375
-
819,786
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings
12
11
11
46,406
133,333
392,718
45,422
3,592
50,967
572,457
99,981
Total Liabilities
572,457
919,767
EQUITY
Stated capital
13
13,955,623
5,829,872
Share based payment reserve
14
443,793
444,846
Retained earnings
(456,473)
(344,980)
Total equity
13,942,943
5,929,738
Total liabilities and equity
14,515,400
6,849,505
These financial statements were approved and authorised for issue by the Board of Directors on 29 October 2020 and were signed on its behalf by:
D R King
Director
29 October 2020
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Stated
Share-based
Retained
Total
Notes
capital
payment reserve
earnings
equity
£
£
£
£
As at 1 July 2018
4,244,166
363,993
(2,358,395)
2,249,764
Comprehensive income
Total Comprehensive income for the year ended 30 June 2019
-
-
2,013,415
2,013,415
Share issue
13
1,585,706
-
-
1,585,706
Transactions with owners
Share options expense
14
-
80,853
-
80,853
As at 30 June 2019
5,829,872
444,846
(344,980)
5,929,738
Comprehensive income
Total Comprehensive loss for the year ended 30 June 2020
-
-
(111,493)
(111,493)
Share issue
13
8,125,751
-
-
8,125,751
Transactions with owners
Share options credit
14
-
(1,053)
-
(1,053)
As at 30 June 2020
13,955,623
443,793
(456,473)
13,942,943
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Year ended 30 June 2020
Year ended 30 June 2019
Notes
£
£
Cash flows from operating activities
(Loss)/profit for the year
(111,493)
2,013,415
Adjustments for:
Net gain on financial assets at fair value through profit or loss
(201,252)
(2,654,137)
Net (loss)/gain on financial liabilities at fair value through profit or loss
(75,419)
183,753
Impairment of intangible assets
6
33,333
66,667
Interest on borrowings
54,575
79,987
Share options credit/expense
14
(1,053)
80,853
Movement in other receivables
7,001
1,212
Movement in trade and other payables
984
2,252
Proceeds from sale of investments
-
1,499,100
Purchase of investments
(5,132,689)
(3,317,515)
Net cash used in operating activities
(5,426,013)
(2,044,413)
Cash flows from financing activities
Proceeds from borrowings
11
-
1,600,000
Interest and charges on borrowings
11
-
(49,395)
Proceeds from issue of ordinary shares
13
7,798,303
-
Net cash generated from financing activities
7,798,303
1,550,605
Net increase/(decrease) in cash and cash equivalents
2,372,290
(493,808)
Cash and cash equivalents at beginning of year
63,374
557,182
Cash and cash equivalents at end of year
10
2,435,664
63,374
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an energy investment company. The investment strategy of the Company is to invest in and provide follow on capital to small and medium sized companies that have significant growth possibilities.
The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM").
Basis of Preparation
The financial statements are prepared on a going concern basis in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and applicable legal and regulatory requirements of the Companies (Jersey) Law 1991. The financial statements have been prepared under the historical cost convention as modified by the valuation of financial assets held at fair value through profit or loss.
The financial statements have been prepared on a going-concern basis as, in the opinion of the Directors, the Company has adequate resources to continue for the foreseeable future and while the COVID-19 pandemic caused a drop in oil prices towards the end of the financial year, the sector is recovering well and going forward is not anticipated to have a material impact on the exploration drilling the Company invests in.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in the preparation of these financial statements are summarised below. These accounting policies have been used throughout all periods presented in the financial statements.
Standards, amendments and interpretations to existing standards that are effective and have been adopted by the Company
The Company has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2019:
- Amendments to IFRS 9 Financial Instruments
- Annual improvements to IFRS standards 2015-2017 cycle
IFRS 16 Leases is not applicable as the Company has not entered into any lease arrangements.
The adoption of the new standard and revisions to the requirements of IFRSs did not result in material changes to the Company's accounting policies or financial statements.
New standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company
At the date of authorisation of these financial statements there are no other standards that are not yet effective and that would be expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and the exercise of judgement by management while applying the Company's accounting policies in relation to the impairment of intangible assets, value of options issued and derivative financial instruments, as set out in notes 6, 11 and 15. Derivative financial instruments, which are embedded in the convertible loan notes issued by the Company, have been presented separately from the host contract. The bifurcation of the embedded derivative financial instruments requires judgement by management to estimate the fair value of the derivatives on initial recognition of the financial instrument. The valuation and subsequent impairment reviews of the Company's intangible assets requires the use
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2. ACCOUNTING POLICIES (continued)
Use of estimates and judgements (continued)
of accounting estimates and judgement by the management. These estimates are based on the management's best knowledge of the events which existed at the date of issue of the financial statements and at the statement of financial position date however, the actual results may differ from these estimates
Financial assets at fair value through profit and loss that are not listed have been valued in accordance with IFRS using the International Private Equity and Venture Capital ("IPEVC") Guidelines and information received from the investment entity. The inputs to value these assets require significant estimates and judgements to be made by the Directors.
Functional and presentation currency
The functional currency of the Company is United Kingdom Pounds Sterling ("Sterling"), the currency of the primary economic environment in which the Company operates. The presentation currency of the Company for accounting purposes is also Sterling.
Foreign currency monetary assets and liabilities are translated into Sterling at the rate of exchange ruling on the last day of the Company's financial year. Foreign currency non-monetary items that are measured at fair value in a foreign currency are translated into Sterling using the exchange rates at the date when the fair value was determined. Foreign currency transactions are translated at the exchange rate ruling on the date of the transaction. Gains and losses arising on the currency translation are included in administrative expenses in the Statement of Comprehensive Income in the year in which they arise.
Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes party to the contractual provisions of the instrument.
(a) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss); and
- those to be measured at amortised cost.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. The Company determines the classification of its financial assets and financial liabilities at initial recognition.
Financial liabilities which are not financial liabilities held at fair value through profit or loss are classified as other financial liabilities and held at amortised cost.
(b) Recognition and measurement
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of comprehensive income.
Subsequent to initial recognition, financial assets at fair value through profit or loss are re-measured at fair value. For listed investments, fair value is determined by reference to stock exchange quoted market bid prices at the close of business at the end of the reporting year, without deduction for transaction costs necessary to realise the asset. For non-listed investments fair value is determined by using recognised valuation methodologies, in accordance with the IPEVC Guidelines. Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the statement of comprehensive income in the period in which they arise.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2. ACCOUNTING POLICIES (continued)
(b) Recognition and measurement (continued)
Subsequent measurement of the Company's debt instruments depends on the model for managing the asset and the cash flow characteristics of the asset.
The Company measures debt instruments at amortised cost if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. The Company recognises any impairment loss on initial recognition and any subsequent movement in the impairment provision in the statement of comprehensive income, see Note 6.
Debt instruments which do not represent solely payments of principal and interest are measured at fair value through profit or loss.
Financial liabilities, which includes borrowings, are measured at amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial liabilities at fair value through profit or loss are re-measured at fair value. The fair value of the derivative financial instruments is determined by reference to stock exchange quoted market bid prices at the close of business at the end of the reporting year, without deduction for transaction costs incurred by the Company on realisation of the liability, see note 11. Gains or losses arising from changes in fair value of financial liabilities at fair value through profit or loss are presented in the statement of comprehensive income in the period in which they arise.
(c) Impairment
Under IFRS 9, the new impairment model requires the recognition of impairment provisions based on expected credit losses ("ECL") rather than only incurred credit losses as was the case under IAS 39. IFRS 9 permits a simplified approach to trade and other receivables which allows the Company to recognise the loss allowance at initial recognition and throughout its life at an amount equal to lifetime ECL. ECL are a probability-weighted estimate of credit losses. A credit loss is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive discounted at the original effective interest rate. ECL consider the amount and timing of payments, thus a credit loss arises even if the entity expects to be paid in full but later than when contractually due.
The historical default rate has been considered by the Directors and there is no history of bad debt. Under IFRS 9 ECL Model as well, which is forward looking, all factors that could contribute to expected future losses have been considered by the Directors and there is no expectation of credit loss in the future. As such the Directors concluded that there is no material impact on the financial statements.
(d) Derecognition
A financial asset or part of a financial asset is derecognised when the rights to receive cash flows from the asset have expired and substantially all risks and rewards of the asset have been transferred.
The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired.
Intangible assets
Separately acquired Net Profit Interest licences ("NPI licences") are classified as intangible assets and are shown at historical cost. Such NPI licences, which are not subject to amortisation, allow the Company to benefit from exploration and extraction of energy resources, if successful, from investee companies granting such NPI licences.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
The value of the NPI licences are assessed periodically for possible impairment when events indicate that the fair value of the intangible asset may be below the Company's carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in net profit or loss on financial assets held at fair value through profit or loss. In making the determination as to whether a decline is other than temporary, the Company considers such factors as the duration and extent of the decline, the investee company's financial performance, and the Company's ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the NPI licences' market value.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks and cash with broker. For the purpose of the Statement of Cash Flows, cash and cash equivalents are considered to be all highly liquid investments with maturity of three months or less at inception.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Transaction costs associated with the issuing of shares are deducted from stated capital. Retained earnings include all current and prior period retained profits. Shares are classified as equity when there is no obligation to transfer cash or other assets.
Expenditure
The expenses of the Company are recognised on an accruals basis in the Statement of Comprehensive Income.
Share options
Equity-settled share-based payment transactions are measured at the fair value of the goods and services received unless that cannot be reliably estimated, in which case they are measured at the fair value of the equity instruments granted. Fair value is measured at the grant date and is estimated using valuation techniques as set out in note 15. The fair value is recognised in the Statement of Comprehensive Income, with a corresponding increase in equity via the share option account. When options are exercised, the relevant amount in the share option account is transferred to stated capital.
3. TAXATION
The Company is subject to income tax at a rate of 0%. The Company is registered as an International Services Entity under the Goods and Services Tax (Jersey) Law 2007 and a fee of £200 has been paid, which has been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES
2020
2019
£
£
Administration and consultancy fees
95,952
47,439
Advisory fees
25,550
25,275
Audit fees
17,500
13,344
Directors' fees
60,000
15,000
Foreign exchange (gains)/losses
(17,988)
25,814
Legal and professional fees
44,357
32,890
Printing and stationery
11,101
10,200
Registered agent's fees
7,265
16,726
Other expenses
57,572
42,774
301,309
229,462
5. EARNINGS PER SHARE
Basic earnings per share (pence)
(0.11)
3.83
Diluted earnings per share (pence)
(0.11)
3.51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
5. EARNINGS PER SHARE (continued)
Current year loss
The calculation of diluted earnings per share is not required this year as a loss for the year is not diluted. The calculations have been left in for information.
The table below presents information on the profit attributable to the shareholders and the weighted average number of shares used in the calculating the basic and diluted earnings per share.
2020
2019
Basic earnings per share
£
£
(Loss)/profit attributable to the shareholders of the Company
(111,493)
2,013,415
Diluted earnings per share
(Loss)/profit attributable to the shareholders of the Company:
Used in calculating basic earnings per share
(111,493)
2,013,415
Add interest expense
54,575
79,987
Less fair value of share options not expensed during the period
-
(3,000)
(Loss)/profit attributable to the shareholders of the Company used in calculating diluted earnings per share
(56,918)
2,090,402
No. of shares
No. of shares
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
103,708,120
52,561,113
Adjustments for calculating of diluted earnings per share:
Share options
1,094,178
687,786
Convertible loan notes
4,044,477
4,032,549
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share
108,846,775
57,281,448
Share options
The share options have been included in the determination of the comparative diluted earnings per share to the extent to which they are dilutive. The share options granted prior to 30 June 2018 did not have an impact on diluted earnings per share as the option price was above the average share price.
The 1,500,000 options granted in April 2019 will not be included in the calculation of diluted earnings per share because they are antidilutive as at 30 June 2019. These potentially dilute earnings per share in the future as these may not be exercised before their expiration date.
No share options were issued during the year ended 30 June 2020.
Convertible loan notes
Conversion options over convertible loan notes are considered to be potential ordinary shares and have been included in the determination of comparative diluted earnings per share from their date of issue. Interest accrued on the convertible loan notes, which may be converted to ordinary shares, is also considered to be dilutive and is included in the comparative diluted earnings per share.
6. INTANGIBLE ASSETS
2020
2019
£
£
At 1 July
33,333
-
Acquisition
-
100,000
Impairment
(33,333)
(66,667)
At 30 June
-
33,333
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
6. INTANGIBLE ASSETS (continued)
The Company acquired Net Profit Interest licences ("NPI") in three offshore UK blocks for £100,000. The NPI licences allow the Company to benefit from near term exploration and appraisal drilling targets, with independent prospect risks, if such exploration and drilling is successful. The NPI licences require no additional investment from the Company. The licences are initially recorded in the books of the Company at cost. An impairment test is performed on an annual basis by the Directors and they are subsequently measured at cost less any adjustments for impairment losses. All of the licences were deemed to be fully impaired by the Directors, as the underlying operating licences had been relinquished by the company granting each NPI licence at the date of this report.
7. FINANCE COSTS
The Company has issued 10% convertible loan notes as set out in note 11. Interest is payable to each of the relevant Noteholders on the principal amount of the Loan Note for the time being outstanding at a rate calculated in accordance with the Instrument. The interest payable at 10% per annum on the Loan Notes held by any Noteholder can be converted into a corresponding number of new fully paid Ordinary Shares at the Noteholder Conversion Price when certain conditions within the Instrument are met.
To date £1.2 million of the principal has been repaid early leaving a residual balance of £400,000 advanced at 30 June 2020.
The interest charge through the statement of comprehensive income during the year was £54,575 (2019: £79,987).
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2020
2019
£
£
Equity investments
Argos Resources Ltd ("Argos")
24,800
26,300
Cataleya Energy Corporation ("Cataleya")
4,590,523
1,993,317
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic")
359,250
1,050,000
JHI Associates Inc ("JHI")
6,353,344
2,662,304
Ratio Petroleum Energy Limited Partnership ("Ratio")
643,446
1,013,876
Ratio Petroleum Energy Limited Partnership Warrants ("Ratio Warrants")
108,373
-
Total investments
12,079,736
6,745,797
Net changes in fair value of financial assets designated at fair value through profit or loss
2020
2019
£
£
Opening Balance
2,032,684
(621,453)
Net movement in fair value gains
201,252
2,654,137
Net fair value gain on financial assets at fair value through profit or loss
2,233,936
2,032,684
On 30 June 2020, the fair value of the Company's holding of 1,000,000 (2019: 1,000,000) ordinary fully paid shares in Argos, representing 0.45% (2019: 0.46%) of the issued share capital of the company, was £24,800 (2019: £26,300) (2.48p per share (2019: 2.63p per share)). No shares were disposed of in the current or prior year.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)
On 30 June 2020, the fair value of the Company's holding of 1,500,000 (2019: 1,500,000) ordinary fully paid shares in Eco Atlantic, representing 0.81% (2019: 0.94%) of the issued share capital of the
company, was £359,250 (2019: £1,050,000) (23.95p per share (2019: 70.00p per share)). No shares were disposed of in the current year (2019: 1,625,000).
On 30 June 2020, the fair value of the Company's holding of 1,200,000 (2019: 1,200,000) ordinary fully paid shares in Ratio, representing 0.70% (2019: 0.70%) of the issued share capital of the
company, was £643,446 (2019: £1,013,876) (53.62p per share (2019: 84.49p per share)). No shares were disposed of in the current year (2019: 18,381).
During the year the Company purchased 389,653 warrants in Ratio for £209,489 (53.76p per warrant). On 30 June 2020, the fair value of the Company's holding of 389,653 warrants in Ratio, representing 0.68% of the issued warrants of the company was £108,373 (27.81p per warrant).
During the year the Company purchased 313,500 ordinary fully paid shares in Cataleya for £2,574,321 (£8.21 per share). On 30 June 2020, the Directors' estimate of the fair value of the Company's holding of 567,185 (2019: 253,685) shares in Cataleya was £4,590,523 (2019: £1,993,317) (£8.09 per share (2019: £7.86)).
During the year the Company purchased 1,350,000 (2019: 2,053,770) ordinary fully paid shares in JHI for £2,348,879 (2019: £1,908,369) (£1.74 per share (2019 :£0.93 per share)) which includes a share issue by the Company of 15,930,000 (2019: 7,145,505) new nil par value ordinary shares as part consideration for JHI shares received during the year (see note 13). On 30 June 2020, the Directors' estimate of the fair value of the Company's holding of 100,000 units (each unit comprising one common share plus one half of one common share purchase warrant) plus 3,463,770 shares (2019: 100,000 units plus 2,113,770 shares) in JHI was £6,353,344 (2019: £2,662,304) £1.78 per share (2019: £1.20 per share). No shares were disposed of in the current or prior year.
9. OTHER RECEIVABLES AND PREPAYMENTS
2020
2019
£
£
Prepayments
-
7,001
10. CASH AND CASH EQUIVALENTS
2020
2019
£
£
Cash at bank
2,223,801
62,362
Cash at broker
211,863
12
2,435,664
63,374
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS
The Company issued £1,600,000 10% convertible loan notes on 24 October 2018. The notes are convertible into ordinary shares of the Company, at the option of the holder, or repayable on 31 March 2021. The conversion price is the higher of £0.08 per share or a 25% discount on the volume weighted average price ("VWAP") 5 days prior to the repayment date. Interest accrued up to and payable on 31 October 2019 may be converted into shares, at the option of the Company, at a conversion price of a 10% discount of VWAP 5 days prior to the payment date. Interest accrued up to and payable on 31 October 2020 may be converted into shares, at the option of the holder, at a conversion price of the higher of £0.08 per share or a 25% discount of VWAP 5 days prior to the payment date.
On 31 October 2019 both the 1st interest payment due (£67,447) and the early repayment of £260,000 principal of the residual £660,000 of 10% p.a. convertible unsecured loan notes was made.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
On 18 March 2019 the Company repaid £940,000 of the principal of the convertible loan notes, the interest accrued on the repaid portion of the convertible loan note was waived by the holder.
Interest
Principal
Total
£
£
£
Face value of notes issued
-
1,600,000
1,600,000
Value of conversion rights
-
(100,000)
(100,000)
Issue costs
-
(49,395)
(49,395)
-
1,450,605
1,450,605
Repayment of convertible loan notes
-
(852,230)
(852,230)
Interest expense
50,967
-
50,967
Interest paid
-
-
-
Total borrowings at 30 June 2019
50,967
598,375
649,342
Repayment of convertible loan notes
-
(235,724)
(235,724)
Interest expense
49,848
-
49,848
Interest paid
(70,748)
-
(70,748)
Total borrowings at 30 June 2020
30,067
362,651
392,718
Interest
Principal
Total
£
£
£
Conversion rights measured at fair value through profit or loss
Opening balance at 1 July 2019
3,592
221,411
225,003
Initial recognition of conversion rights from issue of convertible loan notes
-
-
-
Repayment of convertible loan notes (cancellation of conversion rights)
-
-
-
Movement in fair value
5,284
(96,954)
(91,670)
Total derivative financial instruments at 30 June 2020
8,876
124,457
133,333
Conversion rights measured at fair value through profit or loss
Opening balance at 1 July 2018
-
-
-
Initial recognition of conversion rights from issue of convertible loan notes
-
100,000
100,000
Repayment of convertible loan notes (cancellation of conversion rights)
-
(58,750)
(58,750)
Movement in fair value
3,592
180,161
183,753
Total derivative financial instruments at 30 June 2019
3,592
221,411
225,003
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
The initial fair value of the derivative portion of the convertible loan notes was determined by the potential loss on ordinary shares if converted on the date the convertible loan notes were issued. The derivative financial instruments are recognised as a financial liability measured at fair value through profit or loss. The remainder of the proceeds is allocated to the liability which is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of the convertible loan notes.
12. TRADE AND OTHER PAYABLES
2020
2019
£
£
Accrued expenses
46,406
45,422
13. STATED CAPITAL
Allotted, called up and fully paid:
Ordinary shares
Ordinary shares
No.
£
1 July 2018
47,147,796
4,244,166
Additions
17,618,949
1,585,706
1 July 2019
Additions
64,766,745
60,994,741
5,829,872
8,125,751
At 30 June 2020
125,761,486
13,955,623
On 27 August 2019 the Company issued a total of 38,461,532 new nil par value ordinary shares for a total of £5,000,000, before issue expenses. On 2 September 2019 a further 4,409,999 new nil par value ordinary shares were issued for a total of £573,300.
On 31 October 2019 the Company issued 2,193,210 new nil par value ordinary shares for a total of £327,447 to make both the 1st interest payment due (£67,447) and the early repayment of £260,000 principal of the residual £660,000 of 10% p.a. convertible unsecured loan notes
On 27 May 2020, in accordance with the terms of the JHI share purchase agreements, the Company issued a total of 15,930,000 new nil par value ordinary shares for 1,350,000 JHI shares. The total valuation of the Company's share issue was £2,348,879.
There were no share redemptions during the year ended 30 June 2020 (2019: £Nil).
14. SHARE-BASED PAYMENT RESERVE
2020
2019
£
£
At 1 July
444,846
363,993
Share options credit/expense
(1,053)
80,853
At 30 June
443,793
444,846
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
14. SHARE-BASED PAYMENT RESERVE (Continued)
No options have been issued and none have vested in the year ended 30 June 2020. The options issued on 3 January 2017 were extended on 1 November 2019 with a new expiry date of 31 December 2021.
As no new share options have been issued in the year there are no additional assumptions.
The following assumptions were used to determine the fair value of the options for 2019 and 2020:
Weighted average share price at grant date (pence)
13.75
Exercise price (pence)
14.0
Expected volatility (%)
42.2%
Average option life (years)
5.0
Risk free interest rate (%)
0.380%
The expected volatility is based on the historic volatility of the Company's share prices over the last five years.
The number and weighted average exercise price of share options are as follows:
2020
2020
2019
2019
Weighted average exercise price (p)
Number of options
Weighted average exercise price (p)
Number of options
Outstanding at start of the year
10.10
3,750,000
7.5
2,250,000
Granted during the year
-
-
14.0
1,500,000
Exercised during the year
-
-
-
-
Outstanding at end of the year
10.10
3,750,000
10.10
3,750,000
Exercisable at end of the year
10.10
3,750,000
10.10
3,750,000
15. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling. The Company is exposed to currency risk through its investments in Cataleya, JHI and Ratio. The directors have not hedged this exposure.
Currency exposure as at 30 June:
Assets and net exposure
2020
Assets and net exposure
2019
Currency
£
£
US Dollars
5,786,083
2,113,578
Canadian Dollars
6,175,069
2,542,043
Israeli Shekel
751,819
1,013,876
Total
12,712,971
5,669,497
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. FINANCIAL RISK (continued)
If the value of sterling had strengthened by 5% against all of the currencies, with all other variables held constant at the reporting date, the equity attributable to equity holders and the profit for the period would have decreased by £635,649 (2019: £283,475). The weakening of sterling by 5% would have an equal but opposite effect. The calculations are based on the foreign currency denominated financial assets as at year end and are not representative of the period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate due to changes in market prices. The Company is exposed to price risk on the investments held by the Company and classified by the Company on the Statement of Financial Position as at fair value through profit or loss. To manage its price risk, management closely monitor the activities of the underlying investments.
The Company's exposure to price risk is as follows:
Fair value
£
Fair Value Through Profit or Loss, as at 30 June 2020
12,079,736
Fair Value Through Profit or Loss, as at 30 June 2019
6,745,797
With the exception of JHI and Cataleya, the Company's investments are all publicly traded and listed on either the AIM or the Tel Aviv Stock Exchange. A 30% increase in market price would increase the pre-tax profit for the year and the net assets attributable to ordinary shareholders by £340,761 (2019: £627,053). A 30% reduction in market price would have decreased the pre-tax profit for the year and reduced the net assets attributable to shareholders by an equal but opposite amount. 30% represents management's assessment of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI and Cataleya would increase the pre-tax profit for the year and the net assets attributable to ordinary shareholders by £3,283,160 (2019: £1,396,686). A 30% reduction in market price would have decreased the pre-tax profit for the year and reduced the net assets attributable to shareholders by an equal but opposite amount. 30% represents management's assessment of a reasonably possible change in the market price of JHI and Cataleya based on the price of share purchases over the last two years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk as the interest rate on borrowings is fixed and the Company's cash deposits do not currently earn interest.
b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet commitments it has entered into with the Company. The Directors do not believe the Company is subject to any significant credit risk exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets exposed to credit risk amounted to the following:
2020
2019
£
£
Cash and cash equivalents
2,435,664
63,374
The Company considers that all the above financial assets are not impaired or past due for each of the reporting dates under review and are of good credit quality.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. FINANCIAL RISK (continued)
c) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities as they fall due. The Company's primary source of liquidity consists of cash and cash equivalents and those financial assets which are publicly traded and held at fair value through profit or loss and which are deemed highly liquid.
The following table details the contractual, undiscounted cash flows of the Company's financial liabilities
As at 30 June 2020
Up to 3 months
Up to 1 year
Over 1 year
Total
£
£
£
£
Financial liabilities
Borrowings 1
-
426,630
-
426,630
Trade and other payables
46,406
-
-
46,406
46,406
426,630
-
473,036
As at 30 June 2019
Up to 3 months
Up to 1 year
Over 1 year
Total
£
£
£
£
Financial liabilities
Borrowings 1
-
45,205
660,000
705,205
Trade and other payables
45,422
-
-
45,422
45,422
45,205
660,000
750,627
1 Borrowings are presented in the above tables at their nominal value which represents the undiscounted cash flow amount of the convertible loan notes. The amount may differ from the discounted cash flow amount included in the statement of financial position.
Capital Management
The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern in order to provide optimum returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce cost of capital.
In order to maintain or adjust the capital structure, the Company may issue new shares, return capital to shareholders or sell assets. The Company does not have any debt nor is the Company subject to any external capital requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through profit or loss and fair value is determined via one of the following categories:
Level I - An unadjusted quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. As required by IFRS 7, the Company will not adjust the quoted price for these investments, (even in situations where it holds a large position and a sale could reasonably impact the quoted price).
Fair Value Estimation (continued)
Level II - Inputs are other than unadjusted quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies (see note 11).
Level III - Inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. FINANCIAL RISK (continued)
The following table shows the classification of the Company's financial assets and liabilities:
Level I
Level II
Level III
Total
£
£
£
£
At 30 June 2020
1,135,869
(133,333)
10,943,867
11,964,403
At 30 June 2019
2,090,176
(225,003)
4,655,621
6,547,268
The Company has classified quoted investments as Level I, derivative financial instruments as Level II and unquoted investments as Level III. The Level III investment is at an early stage of development and therefore has been valued based on the recent price of the investment. The Directors have considered market expectations of future performance of the entity's industry sector, in particular known interest in the area of current exploration. As such, the Directors consider that the recent price of the investment in Cataleya and JHI fairly reflects the value of the investments as at 30 June 2020.
A reconciliation of the movements in Level III investments is shown below:
2020
2019
£
£
At start of the year
4,655,621
110,555
Purchases
4,923,200
3,852,263
Change in fair value
1,365,046
692,803
At end of the year
10,943,867
4,655,621
16. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2020
2019
2020
2019
Directors' fees
£
Directors' fees
£
Options outstanding
Options outstanding
D R King
20,000
15,000
500,000
500,000
D Corcoran
-
-
1,000,000
1,000,000
G Walsh
20,000
-
1,000,000
1,000,000
T O'Gorman
20,000
-
750,000
750,000
M Bradlow
(resigned 11 April 2017)
-
-
500,000
500,000
60,000
15,000
3,750,000
3,750,000
At the year end the Company owed £10,000 (2019: £nil) in outstanding directors' fees.
During the year the Company increased Directors fees payable to D R King from £15,000 p.a. to £20,000 p.a. and agreed to pay Directors fees of £20,000 p.a. each to T O'Gorman and G Walsh. D Corcoran continues to be paid on a consultancy fee basis. During the year consultancy fees of £21,551 (2019: £12,185) were paid to D Corcoran.
Nil share options were issued during the year ended 30 June 2020 (2019: 1,500,000) and nil (2019: nil) options were exercised during the year.
The 1,500,000 options issued during the year ended 30 June 2019 are due to expire on 31 March 2024.
The expiry date for remaining 2,250,000 outstanding options, issued during the years ended 30 June 2017 and 30 June 2018 is 31 December 2021, with the term having been extended in November 2019.
The shares held by the Directors are declared in the Directors' report.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
16. DIRECTORS' REMUNERATION AND SHARE OPTIONS (continued)
The Company does not employ any staff except for its Board of Directors. The Company does not contribute to the pensions or any other long-term incentive schemes on behalf of its Directors.
17. RELATED PARTIES
Fees paid to the Directors are disclosed in note 16.
Gerard Walsh, a director of the Company, subscribed for £500,000 of the convertible loan notes issued on 24 October 2018. The total loan payable to Gerard Walsh as at 30 June 2020 was £392,718 (2019: £491,925) which includes £30,067 (2019: £34,110) of accrued interest and the fair value of the conversion rights attributable to Mr Walsh is £133,333 (2019: £170,457). Details of the convertible loan notes are disclosed in note 11.
On 31 October 2019 £100,000 of the principal, and £51,096 of the interest, payable to Mr Walsh under the terms of the Convertible Loan Notes was converted into 1,012,027 nil par value shares of the Company.
Mr Walsh subscribed £292,050 for 2,246,538 nil par value shares as part of the share placing that occurred on 27 August 2019.
Canaccord Genuity as a significant shareholder of the Company is considered a related party under AIM rules.
Canaccord Genuity subscribed £1,356,000 for 10,430,769 nil par value shares as part of the share placing that occurred on 27 August 2019.
On 31 October 2019 £60,000 of the principal, and £6,131 of the interest, payable to Canaccord Genuity under the terms of the Convertible Loan Notes was converted into 442,944 nil par value shares of the Company.
At year end Canaccord Genuity held 28,468,640 Nil Par Value shares in the Company.
As detailed in Note 19 - Subsequent Events (below) the Company announced a grant of 750,000 options over nil par value ordinary shares to Dermot Corcoran after the year end.
The shares held by the Directors are declared in the Directors' report.
18. CONTROLLING PARTY
In the opinion of the Directors, the Company does not have a controlling party.
19. SUBSEQUENT EVENTS
Grant of Options
On 6 August 2020 the Company announced a grant of 750,000 options over nil par value ordinary shares to Dermot Corcoran. The Exercise Price was 17.0 pence per share and the Expiration Date is 31 July 2023. Following this grant Dermot Corcoran's beneficial interests in Share Options was 1,750,000.
Additional investment in JHI
On 10 September 2020 the Company acquired an additional 1,550,000 common shares in JHI by way of the issue of 18,290,000 new ordinary shares of no par value in the Company.
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