REG - Westmount Energy Ld - Final Results & Notice of AGM
01/11/2022 07:17
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RNS Number : 8212E Westmount Energy Limited 01 November 2022
1 November 2022
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 2022, 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 8 December 2022 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
2022 Highlights
· Cash balance of £1.0M at 30 June 2022; no debt
· Indirect exposure to the recently spudded Gazania-1 well,
targeting 300 MMbbls light oil resource, in Block 2B, Orange Basin, South
Africa
· Drilling interregnum with respect to the Canje and Kaieteur
blocks, offshore Guyana, while environmental permitting is progressing with a
view to potential new drilling programs on these blocks from 2023
· Sector consolidation manoeuvres - proposed 'all paper'
acquisition of JHI Associates Inc.
by Eco (Atlantic) Oil & Gas Ltd announced, but subsequently terminated
Globally, the last 12 months have been characterised by a dramatic recovery
from the economic effects of the COVID pandemic. Spiking demand, fostered by
various government stimuli and accommodative monetary policies, had already
resulted in tightening supply chains prior to the impact of the Russian
invasion of Ukraine in February and subsequent disruptions caused by the
western response via sanctions imposed upon Russia. While global oil demand
has rebounded towards pre-COVID levels of approximately 100 MMbbls per day,
supply has struggled to keep up as reflected in the seven successive quarters
of declining global oil inventories prior to April 2022. From mid-year the
global economic outlook has started to weaken as spiralling inflation has
resulted in tightening monetary policies, higher interest rates and bearish
equity markets. Brent oil prices which peaked above USD $120 per barrel in
June have since continued to slide to below USD $90 per barrel in early
October on the back of recessionary concerns. Nevertheless, while the
long-term picture suggests that growth in global oil demand will continue to
decelerate, the near-term outlook remains volatile. Factors that are likely to
influence near term prices include - the tapering of Strategic Petroleum
Reserve releases to the market; switching from gas to oil for electricity
generation due to high gas prices; potential ending of zero-COVID policy and
rolling lockdowns in China, the world's largest oil importer; impact of 2
MMbbls per day OPEC+ supply cuts announced in early October; the trajectory of
the war in Ukraine and associated western sanctions; trends in exchange rates,
with current US dollar strength dampening demand for dollar denominated
commodities like oil.
While there is evidence that long term GDP growth has started to decouple from
total energy demand and CO(2) emissions growth, the short-term trajectory
indicates increasing global energy demand(1). Regional underperformance of
some renewable energy sources together with the ongoing war in Ukraine is
reshaping the immediate energy transition narrative, bringing greater focus on
energy security, system resilience and affordability in the near term. Europe,
in particular, faces significant challenges with respect to energy security
and affordability while trying to decarbonize - in the context of
re-engineering its supply chains to substitute for previous oil and gas
imports from Russia. Longer term the conflicting challenges of growing the
global energy supply by about 20 percent over the next 20 years while reaching
net zero emissions by 2050 is being undermined by underinvestment in the oil
and gas sector. As the recent 'unintended consequences' of over reliance on
renewable energy and/or single suppliers of energy have shown, energy
transition is complex and multi-dimensional which suggests that multiple
reliable sources of energy including low cost, low carbon, oil and gas that
can be rapidly commercialised, will have a role to play in the energy system
for decades to come.
During the last twelve months Guyana has continued its journey towards
becoming a significant oil producing nation with rapidly progressing offshore
developments, including the expected installation of at least six Floating
Production Storage and Offloading (FPSO) units on the Stabroek Block by end
2027 (with a production capacity of more than 1 million BOPD) and the
potential for up to 10 FPSOs based upon the current discovered resource
inventory of in excess of 11 billion barrels of oil equivalent.(2,3) Three
of these FPSOs are already operating or are under construction - with the Liza
Phase 1 (Destiny FPSO) producing at a rate of 140,000 BOPD during 2022 (20,000
BOPD above nameplate capacity), Liza Phase 2 (Unity FPSO) on stream since
February 2022 reaching its nameplate production capacity of 220,000 BOPD in
early June and with a third field development, Payara (Prosperity FPSO), also
with 220,000 BOPD capacity, on track for start-up in late 2023. In addition, a
4(th) development was sanctioned in April 2022. This will bring on stream the
Yellowtail discoveries (One Guyana FPSO), targeting a gross production
capacity of 250,000 BOPD and first oil in 2025. A number of follow-on
developments are also envisaged, including a 5th project centred on the
Uaru-Mako discovery, with a Plan of Development expected to be submitted to
the government by year end 2022 and first oil targeted at the end of 2026.(3)
In parallel with the development of the already discovered resource offshore
Guyana, the multi-billion barrels undiscovered upside in the basin continues
to attract aggressive exploration investment, driven by large prospects, low
breakeven costs, low carbon emissions and the energy transition dynamics. In
October 2021, on the back of a string of exploration successes, estimates of
gross discovered resources on the Stabroek Block were revised upwards to
approximately 10 billion barrels of oil equivalent. The preceding exploration
drilling 'purple patch' included discoveries at Redtail-1, Yellowtail-2,
Uaru-2, Mako-2, Longtail-3, Turbot-2, Whiptail-1, Whiptail-2, Pinktail-1 and
Cataback-1 bringing the total number of reported significant discoveries at
that time on the Stabroek Block to twenty-one. Relentless exploration success
has continued into 2022 with an additional nine significant discoveries
reported so far this year (Fangtooth-1, Lau Lau-1, Patwa-1, Lukanani-1,
Barreleye-1, Seabob-1 Kiru Kiru-1, Yarrow-1 and Sailfin-1) bringing the total
number of discoveries to date, on the Stabroek block, to thirty.(3) In April
2022, Hess Corporation announced an increase in the gross discovered
recoverable resource estimate for the Stabroek Block to approximately 11
billion barrels of oil equivalent. The positive outcome at Fangtooth-1 is of
particular significance as this was the first well dedicated to a deep
exploration target in the Stabroek area, with the results indicating the
potential for commercial exploitation of the deeper plays and offering
encouragement for the drilling of deep targets elsewhere in the basin,
including on the Kaieteur and Canje Blocks. With advertised multibillion
barrel exploration potential in the basin, exploration drilling continues
apace - with a total of 12 exploration and appraisal wells scheduled for
drilling on the Stabroek Block in 2022(3) - signalling continued aggressive
evaluation of the upside potential in the basin within fixed prospecting
licence timeframes.
Separately, in January 2022, the Joint Venture of CGX Energy Inc. and Frontera
Energy Corporation reported the Kawa-1 discovery located in the north of the
Corentyne Block. This well was spudded in a water depth of 355 metres and
drilled to a Total Depth of 6,578 metres. Wireline logging indicates that the
well encountered 61m of net hydrocarbon bearing reservoirs within
Maastrichtian, Campanian, Santonian and Coniacian intervals. Reservoir fluids
are uncertain as MDT fluid samples were not obtained from the well, though the
presence of liquid hydrocarbons has been interpreted in the Santonian
reservoir, from other analyses.(4) Kawa-1 was plugged and abandoned and the
commercial potential of the discovery has yet to be determined. The Joint
Venture is planning to follow-up with the Wei-1 exploration well, in Q4 of
2022, targeting stacked Campanian and Santonian channel sandstone reservoirs.
In the Surinamese sector, the Total/Apache consortium has increased its
discovery count from four to six with the announcement of the Krabdagu-1
(Block 58) and Baja-1 (Block 53) discoveries in February and August 2022,
respectively(4,5). Prior stacked reservoir discoveries on Block 58 reported
generally light oil and gas-condensate pay in shallower Campanian reservoirs
overlying light oil pay in deeper Santonian reservoirs - pointing towards some
potential challenges around valorisation of large associated gas volumes. The
Krabdagu-1 well encountered 90 metres of net oil pay in good quality
Maastrichtian and Campanian reservoirs. Subsequent flow testing of two lower
intervals, in the Upper and Lower Campanian, indicated the presence of
35(o)-37(o)API oil and a connected oil-in-place resource of 180 MMbbls
attributable to these two reservoirs. In spite of reported correlation issues
between seismic and well data, Total as operator, continues to focus on
appraisal of the shallower Maastrichtian-Campanian reservoirs with a view to
progression towards FID in mid-2023 for the initial standalone oil development
on Block 58. Results at Sapakara South-1 appraisal well, drilled 4 kms east of
the Sapakara-1 discovery well, were announced in November 2021 - confirming
the presence of 30m net high-quality black oil in Maastrichtian-Campanian
sandstones which flowed 4,800 BOPD during a restricted flow test, with
analysis indicating a connected in-place resource of more than 400 MMbbls in a
single reservoir. However, disappointing Maastrichtian-Campanian appraisal
outcomes were reported during the period on the eastern side of Kwaskwasi and
at Keskesi South-1, together with two exploration failures at Rasper-1 (Block
53) and Dikkop-1 (Block 58).(4,5) In addition, during November 2021, the
Total/Apache consortium reported a non-commercial discovery at the Bonboni-1
exploration well in the north of Block 58. This well encountered high quality
water bearing reservoirs in the primary Maastrichtian-Campanian targets though
a single Maastrichtian sandstone contained 16m of net oil pay with an
estimated 25(o)API oil gravity.
Exploration drilling results continue to support the presence of multiple
plays, quality reservoirs and the potential for stacked-pay drilling
opportunities within the basin. Although the Upper Cretaceous
Maastrichtian-Campanian Liza play dominates in terms of number of discoveries
and discovered volumes to date the deeper Santonian pools on Block 58, in
conjunction with the deeper hydrocarbons reported at Liza-3, Tripletail-1,
Yellowtail-2, Uaru-2, Turbot-2, Longtail-3, Hassa-1 and Fangtooth-1 on the
Stabroek Block, together with the hydrocarbon shows reported at Sapote-1 on
the Canje Block, and the logged net pay in the Santonian-Coniacian intervals
at Kawa-1 on the Corentyne Block, all suggest an extensive emerging deeper
play fairway within the basin. Offshore Suriname, oil pay has recently been
reported from the Zanderij-1 (Shell, Block 42) where the operator was
targeting the Santonian and deeper intervals, with well results currently
under evaluation.(6) Additional deep drilling with multiple targets is
scheduled from Q4 2022 at Wei-1 (CGX Energy Inc., Corentyne Block), at Awari-1
(TotalEnergies, Block 58) and at Fangtooth SE-1, Fish-1 and Lancetfish-1
(ExxonMobil, Stabroek Block).
It is against this backdrop that the hydrocarbon plays and prospect
inventories on the Kaieteur and Canje blocks are being reassessed - by
integrating the analysis of the extensive core and fluid samples collected
during the 2020-2021 drilling campaigns, by updating the regional petroleum
system models and by high grading prospects for the next phase of drilling.
Kaieteur Block
The first well on the Kaieteur block, Tanager-1, remains the deepest well
drilled in the Guyana-Suriname Basin to date. It was spudded on 11 August
2020, using the Stena Carron drillship. The well was drilled in a water depth
of 2,900 metres and reached a total depth of 7,633 metres circa mid-November
2021. Evaluation of LWD, wireline logging and sampling data confirmed 16
metres of net oil pay (20(o)API oil) in high-quality sandstone reservoirs of
Maastrichtian age. Although high quality reservoirs were also encountered at
the deeper Santonian and Turonian intervals, initial interpretation of the
reservoir fluids was reported to be equivocal, requiring further analysis -
results of which have yet to be disclosed. Post well analysis and integration
of the data collected continues with a view to high grading the next drilling
target on the Kaieteur block.
A post-well Netherland, Sewell & Associates Inc. ("NSAI") published CPR
(February 14, 2021) indicates that the Tanager-1 Maastrichtian discovery
contains a 'Best Estimate' Unrisked Gross (2C) Contingent Oil Resource of 65.3
MMBBLs (Low to High Estimates 17.7 MMBBLs to 131 MMBBLs) - with a 'Best
Estimate' Unrisked Net (2C) Contingent Oil Resource attributable to the
Kaieteur Block of 42.7 MMBBLs (Low to High Estimates 11.3 MMBBLs to 86
MMBBLs). However, this discovery is currently considered to be non-commercial
as a standalone development.
Subsequent to the Tanager-1 discovery, on 24 May 2021, it was announced that
Hess Corporation ("Hess") had increased its working interest ("WI") in the
Kaieteur Block, offshore Guyana, from 15% to 20% via the farm-down of a 5% WI
by Cataleya Energy Limited ("CEL"). Although the details of this farm-in
transaction were not disclosed this farm-in, by one of the Stabroek block
partners and a leading player in the Guyana-Suriname basin, suggests
confidence in the prospective resource potential of the Kaieteur Block and
augurs well for the continuing exploration of the area.
On 23 August 2021 it was announced that the date for elective nomination, by
the operator, of the prospect target for the second well on the Kaieteur Block
has been extended by seven months and on 22 March 2022 a further extension of
the nomination date was agreed to 2 October 2023. The Kaieteur Block partners
agreed to this extension to facilitate continuing geological and geophysical
analysis by the operator and integration of recent and ongoing deep play
drilling program results on adjacent blocks into the Kaieteur prospect
nomination decision. Under a farm-in agreement executed with ExxonMobil
(operator) in 2016, any drilling consequent to the 2nd well prospect
nomination decision will commence within nine months of the nomination date.
The operator, as farminee, continues to bear all farmor JV expenses during the
prospect nomination extension period.
In September 2021, the operator, ExxonMobil, submitted an application for
environmental authorization to the Environmental Protection Agency (EPA) to
proceed with an up to 12 well exploration campaign on the Kaieteur Block.
The Kaieteur Block is currently operated by an ExxonMobil subsidiary, Esso
Production & Exploration Guyana Limited (35%), with Cataleya Energy
Limited ("CEL") (20%), Ratio Guyana Limited ("RGL") (25%) and a subsidiary of
Hess Corporation, Hess Guyana (Block B) Exploration Limited (20%) as partners.
Westmount retains a holding of approximately 5.3% of the issued share capital
of Cataleya Energy Corporation ("CEC") the parent company of CEL and circa
0.04% of the issued share capital of Ratio Petroleum Energy Limited
Partnership ("Ratio Petroleum") the ultimate holding entity with respect to
RGL.
Canje Block
The first well on the Canje block, Bulletwood-1, was spudded on 31 December
2020 using the Stena Carron drillship and was completed in early March. The
well was safely drilled in a water depth of 2,846 metres to its planned target
depth of 6,690 meters. The primary target in the well was a Campanian age
confined channel complex. The well encountered quality reservoirs but
non-commercial hydrocarbons. There has been limited disclosure of the well
results to date as detailed analysis of the data collected is ongoing.
However, the initial results confirm the presence of the Guyana-Suriname
petroleum system and the potential prospectivity of the Canje Block.
Initial drilling operations at the second well on the Canje block, Jabillo-1,
commenced on 14 March 2021 using the Stena Carron drillship. Previously
published information indicated that Jabillo-1 was targeting a Late
Cretaceous, Liza-age equivalent, basin floor fan. After interruption for a
brief period of maintenance work on the drillship drilling operations at
Jabillo-1 recommenced circa 5 June 2021 and were completed in early July. The
well was safely drilled in a water depth of 2,903 metres to its planned target
depth of 6,475 meters. The well did not encounter commercial hydrocarbons.
The third well on the Canje block, Sapote-1, was spudded circa 29 August 2021,
using the Stena DrillMAX drillship, and reached TD in late October 2021. This
well is located in the southeast of the Canje Block, approximately 60kms north
of the Campanian and Santonian Maka Central-1 stacked pay discovery. The well
was safely drilled in a water depth of 2,549 metres to a total depth of 6,758
meters. It encountered non-commercial hydrocarbons in one of the deeper
exploration targets.
Westmount holds an indirect interest in the Canje Block as a result of its
circa 7.2% interest in the issued share capital of JHI Associates Inc.
("JHI"). The company also holds an additional indirect interest in the Canje
Block as a result of its shareholding in Eco (Atlantic) Oil and Ltd. ("EOG")
and following the investments in JHI Associates Inc. ("JHI") announced by EOG
on 28 June 2021 and 19 January 2022. Subsequent to the initial EOG transaction
and a previous 2018 farm-out to Total, JHI was fully carried/funded for the
2021 three well drilling campaign and is also funded for additional drilling,
with a reported USD$19.7M in cash and cash equivalents as of 31 December
2021.(7)
On 14 March 2022, EOG announced that it had signed a Commercially Binding Term
Sheet to acquire 100% of JHI, including its wholly owned subsidiary JHI
Associates (BVI) Inc., via a cashless transaction. However, on 14 June 2022
EOG announced that the proposed acquisition had been terminated.(7)
The Canje Block is currently operated by an ExxonMobil subsidiary, Esso
Exploration & Production Guyana Limited (35%), with TotalEnergies E&P
Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%) and Mid-Atlantic Oil
& Gas Inc. (12.5%) as partners.
Orinduik Block
Westmount continues to hold an indirect interest in the Orinduik Block as a
result of its circa 0.4% interest in the issued share capital of Eco
(Atlantic) Oil and Gas Ltd. ("EOG"). Over the last 12 months the focus of the
Orinduik Block JV partners has continued to be on the analysis and
assimilation of the 2019/20 drilling results and data gathering program, the
reprocessing and re-interpretation of the 3D seismic data, and the highgrading
of the Cretaceous light oil prospect inventory with a view to target selection
for the next drilling campaign on the Orinduik Block.
The Orinduik Block is currently operated by Tullow Guyana B.V. (60%), with
TOQAP Guyana B.V. (25%) and EOG (15%) as partners. TOQAP Guyana B.V. is
jointly owned by TotalEnergies E&P Guyana B.V. (60%) and Qatar Petroleum
(40%).
Portfolio Effect
Westmount's investment strategy has been to provide shareholders exposure to a
portfolio of drilling outcomes in the Guyana-Suriname Basin, in blocks
immediately adjacent to the prolific Stabroek Block. Since 2019, we have
participated, indirectly via our investee companies, in six wells (Jethro-1,
Joe-1, Tanager-1, Bulletwood-1, Jabillo-1 and Sapote-1), offshore Guyana,
which have yielded three oil discoveries (Jethro, Joe and Tanager), but no
standalone commercial success to date. While these initial drilling outcomes
are below our expectations for the portfolio, the results provide
encouragement and must be viewed in the context of 'large step-out' wells
evaluating giant stratigraphic prospects while seeking to establish the
perimeter of the multiple Tertiary and Cretaceous play fairways both to the
northeast and southwest of the prolific Stabroek block. Recent discoveries
reported by Apache in Block 53 (Baja-1; 34m net light oil pay) and by CGX
Energy Inc. in Corentyne Block (Kawa-1; 61m logged net hydrocarbon pay) have
confirmed the potential for significant discoveries out-with of the main
Stabroek-Block 58 trend.
In any case, the high-quality reservoirs of various stratigraphic ages
encountered in the initial Kaieteur, Canje and Orinduik drilling campaigns
indicates that these areas are capable of supporting deep-water developments
when containing commercial volumes of light oil. Recent public domain
presentation and commentary suggests that trap adequacy and hydrocarbon
migration/timing are the key exploration risks inferred from these initial
drilling results, out-with of the Stabroek Block sweet-spot. The current
drilling interregnum provides an opportunity to fully digest the learnings of
the initial drilling programs and the ongoing neighbourhood successes. These
results together with the analysis and synthesis of the extensive well data
gathering programs executed by the respective operators should improve
understanding of the plays, reduce sub-surface risk and inform prospect
selection for the next round of drilling on the Canje, Kaieteur and Orinduik
blocks.
We remain hopeful that the geoscience learning curve combined with the
portfolio effect provided by drilling an extended sequence of prospects in
this prolific basin will win out over individual prospect risks to yield a
commercial discovery. We look forward to the next drilling campaign across
these blocks which is expected to commence as soon as the re-evaluation
groundwork has been completed and drilling permits are in place. Environmental
permitting applications, with respect to potential 12 well drilling programs
on both the Kaieteur and Canje blocks, have already been submitted by the
operator, ExxonMobil, and are under discussion with the Environmental
Protection Agency (EPA).
In the meantime, the Westmount portfolio benefits from additional
diversification via indirect exposure to the recently spudded Gazania-1 well,
courtesy of EOG's 50% Working Interest in Block 2B, offshore South Africa.
Block 2B is located in the south-eastern part of the emerging Orange Basin
where exploration activity has been energised by the recently announced
Venus-1 (TotalEnergies) and Graff-1 (Shell) giant light oil and associated gas
discoveries, offshore Namibia. This Gazania-1 well is targeting a 300 MMbbls
prospective oil resource in stacked pay up dip of the 1988 A-J1 light oil
discovery.(7) The well is located circa 25kms offshore, in water depth of 150
meters, with an estimated total depth of approximately 2,800 meters. The well
is being drilled using the Island Innovator semi-submersible rig, is estimated
to take approximately 25 days to drill, with an option to drill a side-track
well contingent on a discovery in the main target.
Investment portfolio summary
As of 30 June 2022 Westmount had a cash balance of £1.0M and is debt free.
As of 30 June 2022 Westmount continues to hold a total of 5,651,270 shares in
JHI, representing approximately 7.2% of the issued common shares in JHI.
Westmount continues to hold a total of 567,185 common shares in CEC,
representing approximately 5.3% of the issued share capital of CEC.
Westmount continues to hold 1,500,000 shares in EOG, representing
approximately 0.44% of the common shares in issue.
Westmount continues to hold 89,653 shares in Ratio Petroleum representing
approximately 0.04% of the issued share capital.
The complete investment portfolio is summarised in Table 1.
The reported financial loss for the period is primarily made up of a non-cash
loss on financial assets held at fair value through the profit and loss, some
of which is as a result of foreign exchange movements on the portfolio
investments when valued at the period end.
On 14 March 2022 a proposed 'all paper' acquisition of JHI by EOG was
announced, offering a consideration to JHI shareholders of 1.1994 new common
shares in EOG for each JHI share held which in aggregate, upon completion,
would lead to JHI shareholders holding approximately 34% of the enlarged
issued share capital of EOG. However, this proposed transaction was
subsequently terminated on 14 June 2022.(7)
Summary/Outlook
A dramatic recovery from the economic effects of the COVID pandemic, combined
with the invasion of Ukraine and associated consequences, has resulted in
surging oil and gas prices during the first half of 2022. While this
environment has had a positive impact on industry sentiment, a change in the
economic picture from mid-year due to spiking inflation, rising interest rates
and gathering recessionary clouds have induced a softening in oil prices with
a volatile outlook ahead. Energy security, energy system resilience and energy
affordability have now become key considerations for governments and policy
makers in the face of dawning recognition that overreliance on single sources
of energy supply together with years of underinvestment in oil and gas are
significant factors in the current energy supply-demand gap.
With at least 11 significant discoveries reported so far in 2022, the
Guyana-Suriname basin continues to be a global hotspot for exploration
activity. An industry focus on 'advantaged barrels' resulting from the unique
combination of prospect sizes, reservoir quality, low carbon intensity and low
breakeven metrics ($25/bbl-$35/bbl), is likely to see exploration drilling
maintained offshore Guyana for some time to come. While the initial drilling
outcomes from the Westmount portfolio have yet to deliver a standalone
commercial discovery, the results to date provide encouragement and must be
viewed in the context of initial 'large step-out' wells evaluating giant
stratigraphic prospects while seeking to establish the perimeter of the
multiple play fairways both to the northeast and southwest of the prolific
Stabroek block.
We are also heartened by the industry's continuing appetite for exploration
acreage in the Guyana-Suriname basin in spite of the mixed drilling results to
date out-with of the Stabroek block - such as the Hess 5% farm-in on the
Kaieteur Block (post Tanager-1) and the award of 3 blocks in the Surinamese
Shallow Offshore Bid Round 2020/21 to Chevron (Block 5 - subsequently, farmed
into by Shell) and TotalEnergies + Qatar Petroleum (Blocks 6 and 8).
Furthermore, the applications for environmental authorisation submitted to the
Guyanese EPA by ExxonMobil the operator of the Canje and Kaieteur blocks
augurs well for potentially extensive new drilling programs on these blocks
after the re-evaluation and permitting groundwork is completed.
Westmount's strategy remains one of seeking value creation for shareholders
via exposure to high impact drilling outcomes. While our primary focus
remains the Guyana-Suriname basin we are open to other opportunities that make
sense for our shareholders. Our primary investee companies CEC, JHI and EOG
are well funded for participation in near term drilling opportunities and we
are excited by our immediate exposure to the additional portfolio
diversification offered by EOG's participation in Gazania-1, a 300 MMbbl light
oil prospect, in the emerging Orange Basin, South Africa. Furthermore,
possible consolidation manoeuvres may bring book value realignment while
offering risk diversification and exposure to multiple additional high impact
drilling events. In this context, and in spite of the access challenges, your
Board remains focused on investment opportunities and deployment of capital
that gives additional exposure to drilling of high value prospects. There are
likely to be more consolidation opportunities amongst the junior players
within the Guyana-Suriname Basin, as exploration matures and in response to
risk management demands of investor capital. In the meantime, we look forward
to the outcome of the Gazania-1 well in South Africa.
GERARD WALSH
Chairman
31 October 2022
Notes
(1)TotalEnergies Energy Outlook 2022
2ExxonMobil 2022 Investor Day Presentation.
(3)Hess 2(nd) Quarter 2022 Conference Call Remarks
(4)CGX Energy Inc. News Releases 2 March 2022 and 4 March 2022.
(5)APA Corporation News Releases 29 July, 29 September and 16 November 2021;
21 February, 21 June and 23 August 2022.
(6)Hess 3rd Quarter 2022 Conference Call Remarks
(7)Eco (Atlantic) Oil & Gas Ltd. News Releases 14 March, 14 June and 12
August 2022.
For further information, please contact:
Westmount Energy
Limited
www.westmountenergy.com (http://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 / Neil McDonald / Pete Lynch
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2022
The Directors present their annual report and the audited financial statements
of Westmount Energy Limited (the "Company") for the year ended 30 June 2022.
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 8.
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"). On 1 December 2020 the Company commenced
cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol
"WMELF".
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the date of this
report were as follows:
Shares held at Options held at
30 June 2022 30 June 2022
G Walsh (Chairman) 11,933,565 500,000
D R King - 250,000
T P O'Gorman 4,650,000 250,000
D Corcoran 5,250,000 1,250,000
RESULTS AND DIVIDENDS
The result for the year is set out on page 19 in the Statement of
Comprehensive Income. The Directors do not recommend the payment of a dividend
in respect of these financial statements (2021: £Nil).
The Directors acknowledge the continued outbreak of Coronavirus ("COVID-19")
and its potentially adverse economic impact. The Directors consider that at
this stage the Company is not experiencing any major disruption to its
business model from COVID-19 nor its effect on the oil and capital markets.
The Directors will continue however, to closely monitor the ongoing impact of
COVID-19 on the Company's operations.
During the year, Ukraine was invaded by the Russian military. This had an
immediate impact on the global economy due to sanctions being imposed on
Russia. Oil and gas prices have risen significantly and there have been
restrictions on the exportation of goods from both the Ukraine and Russia. In
preparing these financial statements, these uncertainties have been considered
throughout. At the date of signing these financial statements it remains to be
seen what impact this will have on the EU economy and the property markets.
The Directors will continue to monitor the situation on a regular basis.
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman, age 59, 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 64, 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 70, 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.
Dermot Corcoran, age 63, 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;
· 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 and the
applicable OTCQB Market standards.
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
31 October 2022
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.
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 three 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 regards 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.
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 regularly 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
(http://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 2022 which comprise the
Statement of Comprehensive Income, the Statement of Financial Position,
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 ('IFRSs') 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 2022 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs 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)) and applicable law. 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 in Jersey,
including the Financial Reporting Council'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.
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.
Emphasis of matter
We draw your attention to note 7 and note 14 of the financial statements,
which include unlisted investments held by the Company and carried at
£6,852,817 (2021: £13,989,918) 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.
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 assets. The
relevant accounting policies and investment composition are discussed in note
2 and note 7, respectively, to the financial statements.
The investments represent listed and unlisted equity instruments amounting to
£0.41 million and
£6.9 million, respectively, as at 30 June 2022. The identified risk
predominantly relates to the unquoted investment which valuation carries a
greater degree of judgement by the directors and has been valued based upon
the price of recent investments, a valuation basis included in the
International Private Equity and Venture Capital Guidelines (IPEVC
Guidelines).
Our main audit procedures to address the identified risk in respect of the
unlisted investment were (a) we discussed with management their unlisted
valuation methodology, and assessed the recognition and measurement of the
unlisted investment held for compliance with IFRSs, and whether it had been
accounted for in accordance with the stated accounting policy and with IPEVC
Guidelines; (b) we substantiated the nature and background of recent
transactions which had
been used as the basis of the valuation. We have not identified any material
issues from the completion of the above procedures; and (c) where the price of
recent transaction do not coincide to the Company's year-end, we have
performed independent research about events or conditions that may indicate
the need to recalibrate the price to take into account the impact of such
event or condition.
· Risk of management override of controls. In accordance with
ISAs (UK), we are required to consider the risk of management override of
internal controls. Due to the unpredictable nature of this risk, we are
required to assess it as a significant risk requiring special audit
consideration.
Our audit work included, but was not restricted to, specific procedures
relating to the risk that are required by ISA (UK) 240, The Auditor's
Responsibilities Relating to Fraud in an Audit of Financial Statements, which
includes the testing of journal entries, evaluation of judgements and
assumptions in management's estimate, and test of significant transactions
outside the normal course of business. We have not identified any material
issues from the completion of the above procedures.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting included understanding
the nature of the Company, its business model, system of internal control and
related risks including the relevant impact of the COVID-19 pandemic to the
business, reviewing the performance of the underlying investments, critically
assessing the key assumptions made by management including its appropriateness
in the context of the financial reporting framework, and evaluating the
directors' plans for future actions in relation to their assessment.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
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.
We have used approximately 2% of gross assets rounded down, or £165,000
(2021: £313,000) which reflects the fact that this is an investment fund
where its market value is determined predominantly by its gross asset value.
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 10, 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.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
The objectives of our audit in respect of fraud, are to identify and assess
the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond appropriately to
instances of fraud or suspected fraud identified during the audit. However,
the primary responsibility for the prevention and detection of fraud rests
with both management and those charged with governance of the Company.
Our approach was as follows:
· We obtained an understanding of the legal and regulatory
requirements applicable to the Company and considered that the most
significant but not limited to the Companies (Jersey) Law 1991, AIM Rule 26
and the applicable OTCQB Market standards. We also reviewed the laws and
regulations applicable to the Company that has indirect impact to the
financial statements.
· We obtained an understanding of how the Company complies with
these requirements by discussions with management and those charged with
governance.
· We assessed the risk of material misstatement of the financial
statements, including the risk of material misstatement due to fraud and how
it might occur, by holding discussions with management and those charged with
governance.
· We inquired of management and those charged with governance as to
any known instances of non-compliance or suspected non-compliance with laws
and regulations.
· We reviewed the compliance reports and minutes of the meeting to
see whether there is non-compliance reported to management and those charged
with governance.
· Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws and
regulations. This included making enquiries of management and those charged
with governance and obtaining additional corroborative evidence as required.
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
31 October 2022
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Year ended 30 June 2022 Year ended 30 June 2021
Notes £ £
Net fair value losses on financial assets held at fair value through profit or (7,203,727) (692,288)
loss
7
Net fair value gains on financial liabilities held at fair value through
profit or loss
10 - 103,205
Finance income
133 -
Finance costs
6 - (33,702)
Administrative expenses
4 (247,627) (267,397)
Foreign exchange gains/(losses) 23,971 (100,160)
Share options expense 13 - (25,877)
Operating loss (7,427,250) (1,016,219)
Loss before tax (7,427,250) (1,016,219)
Tax 3 - -
Loss after tax (7,427,250) (1,016,219)
Other comprehensive income - -
Total comprehensive loss for the year (7,427,250) (1,016,219)
Basic earnings per share (pence) continuing and total operations 5 (5.16) (0.72)
Diluted earnings per share (pence) continuing and total operations 5 (5.16) (0.69)
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
As at As at
30 June 2022 30 June 2021
Notes £ £
ASSETS
Non-current assets
Financial assets held at fair value through profit or loss 7 7,261,904 14,465,631
7,261,904 14,465,631
Current assets
Other receivables and prepayments 8 10,146 4,441
Cash and cash equivalents 9 1,003,090 1,218,922
1,013,236 1,223,363
Total assets 8,275,140 15,688,994
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 11 52,930 39,534
52,930 39,534
Total Liabilities 52,930 39,534
EQUITY
Stated capital 12 16,652,482 16,652,482
Share based payment reserve 13 469,670 469,670
Retained earnings (8,899,942) (1,472,692)
Total equity 8,222,210 15,649,460
Total liabilities and equity 8,275,140 15,688,994
These financial statements were approved and authorised for issue by the Board
of Directors on 31 October 2022 and were signed on its behalf by:
D R King
Director
31 October 2022
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Retained Total
Stated Share-based
Notes capital payment reserve earnings equity
£ £ £ £
As at 1 July 2020 13,955,623 443,793 (456,473) 13,942,943
Comprehensive income
Total Comprehensive loss for the year ended 30 June 2021 - - (1,016,219) (1,016,219)
Share issue 12 2,696,859 - - 2,696,859
Transactions with owners
Share options credit 13 - 25,877 - 25,877
As at 30 June 2021 16,652,482 469,670 (1,472,692) 15,649,460
Comprehensive income
Total Comprehensive loss for the year ended 30 June 2022 - - (7,427,250) (7,427,250)
As at 30 June 2022 16,652,482 469,670 (8,899,942) 8,222,210
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Year ended 30 June 2022 Year ended 30 June 2021
Notes £ £
Cash flows from operating activities
Loss for the year (7,427,250) (1,016,219)
Adjustments for:
Net loss on financial assets at fair value through profit or loss 7,203,727 692,288
Net gain on financial liabilities at fair value through profit or loss - (103,205)
Interest on borrowings - 33,702
Share options expense/(credit) 13 - 25,877
Movement in other receivables and prepayments (5,704) (4,441)
Movement in trade and other payables 13,395 (6,874)
Proceeds from sale of investments 7 - 356,011
Purchase of investments 7 - (737,334)
Net cash used in operating activities (215,832) (760,194)
Cash flows from financing activities
Repayment of convertible loan notes 10 - (456,548)
Net cash used in financing activities - (456,548)
Net decrease in cash and cash equivalents (215,832) (1,216,742)
Cash and cash equivalents at beginning of year 1,218,922 2,435,664
Cash and cash equivalents at end of year 9 1,003,090 1,218,922
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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"). On 1 December 2020 the Company commenced
cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol
"WMELF".
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 Directors are satisfied that the Company has sufficient liquidity to meet
its operational expenditure and obligations from the date of approval of the
financial statements. The Directors monitor the income and expenditure of the
Company and have concluded that, at the time of approving the financial
statements of the Company, there is a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future. Thus they have adopted the going concern basis of
accounting in preparing the annual financial statements.
Ukraine invasion
During the year ended 30 June 2022 Ukraine was invaded by the Russian
military. This had an immediate impact on the global economy due to
sanctions being imposed on Russia. Oil and gas prices have risen
significantly and there have been restrictions on the exportation of goods
from both the Ukraine and Russia. In preparing these financial statements,
these uncertainties have been considered throughout. At the date of signing
these financial statements it remains to be seen what impact this will have on
the EU economy and the property markets. The Directors will continue to
monitor the situation on a regular basis.
COVID-19
The Directors acknowledge the continued outbreak of Coronavirus ("COVID-19")
and its potentially adverse economic impact. The Directors consider that at
this stage the Company is not experiencing any major disruption to its
business model from COVID-19 nor its effect on the oil and capital markets.
The Directors will continue however, to closely monitor the ongoing impact of
COVID-19 on the Company's operations.
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.
New standards, amendments and interpretations to existing standards that are
effective in the current year
There are no standards, amendments to standards or interpretations that are
effective for annual periods beginning on 1 July 2021 that have a material
effect on the financial statements of the Company.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2. ACCOUNTING POLICIES (continued)
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 value of options
issued and derivative financial instruments, as set out in notes 10, 13 and
14. 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.
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. The Directors have
considered the sensitivity of the valuations as detailed in note 14.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2. ACCOUNTING POLICIES (continued)
(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.
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.
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 10. 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 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2. ACCOUNTING POLICIES (continued)
(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.
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 13. The fair value is recognised in
the Statement of Comprehensive Income, with a corresponding increase in equity
via the share option account in profit or loss. When options are exercised,
the relevant amount in the share option account is transferred to stated
capital. When options expire, the Company does not subsequently reverse the
amounts already recognised for services received from the Directors.
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 £300 has been paid, which has
been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES
2022 2021
£ £
Administration and consultancy fees 55,755 57,860
Advisory fees 26,922 41,240
Audit fees 16,636 15,500
Directors' fees 60,000 60,000
Legal and professional fees 20,853 37,194
Printing and stationery 20,720 4,564
Registered agent's fees 22,459 21,974
Other expenses 24,282 29,065
247,627 267,397
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
5. EARNINGS PER SHARE
2022 2021
£ £
Basic earnings per share (pence) (5.16) (0.72)
Diluted earnings per share (pence) (5.16) (0.69)
Current year loss
The calculation of diluted earnings per share is not required this year as the
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.
2022 2021
Basic earnings per share £ £
Loss attributable to the shareholders of the Company (7,427,250) (1,016,219)
Diluted earnings per share
(Loss)/profit attributable to the shareholders of the Company:
Used in calculating basic earnings per share (7,427,250) (1,016,219)
Add interest expense - 33,702
Loss attributable to the shareholders of the Company used in calculating (7,427,250) (982,517)
diluted earnings per share
No. of shares No. of shares
Weighted average number of ordinary shares used as the denominator in 144,051,486 140,364,390
calculating basic earnings per share
Adjustments for calculating of diluted earnings per share:
Share options - 1,407,808
Convertible loan notes - -
Weighted average number of ordinary shares and potential ordinary shares used 144,051,486 141,772,198
as the denominator in calculating diluted earnings per share
Share options
The share options have been included in the determination of the diluted
earnings per share to the extent to which they are dilutive.
750,000 share options were granted on 6 August 2020. These were not included
in the comparative calculation of diluted earnings per share because they are
antidilutive as at 30 June 2022. These potentially dilute earnings per share
in the future as they may not be exercised before their expiration date.
6. FINANCE COSTS
The Company previously issued 10% convertible loan notes as set out in note
10. Interest was 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.
On 31 March 2021 the remaining principal of £400,000 was repaid in full along
with the accrued interest of £56,548.
The interest charge through the Statement of Comprehensive Income during the
prior year was £33,702.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2022 2021
£ £
Equity investments
Argos Resources Ltd ("Argos") 17,400 27,300
Cataleya Energy Corporation ("Cataleya") 4,670,296 4,105,846
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 384,750 433,500
JHI Associates Inc ("JHI") 2,182,521 9,884,072
Ratio Petroleum Energy Limited Partnership ("Ratio") 6,937 14,913
Total investments 7,261,904 14,465,631
Net changes in fair value of financial assets designated at fair value through
profit or loss
2022 2021
£ £
Opening cumulative unrealised gain 1,604,358 2,191,024
Net unrealised movement (7,203,727) (586,666)
Cumulative unrealised (loss) / gain on financial assets at fair value through (5,599,369) 1,604,358
profit or loss
2022 2021
£ £
Unrealised loss (7,203,727) (586,666)
Realised loss on disposal of financial assets - (105,622)
Net changes in fair value of financial assets at fair value through profit or (7,203,727) (692,288)
loss
On 30 June 2022, the fair value of the Company's holding of 1,000,000 (2021:
1,000,000) ordinary fully paid shares in Argos, representing 0.43% (2021:
0.43%) of the issued share capital of the company, was £17,400 (2021:
£27,300) (1.74p per share (2021: 2.73p per share)). No shares were purchased
or disposed of in the current nor prior years.
On 30 June 2022, the fair value of the Company's holding of 1,500,000 (2021:
1,500,000) ordinary fully paid shares in Eco Atlantic, representing 0.44%
(2021: 0.75%) of the issued share capital of the
company, was £384,750 (2021: £433,500) (25.65p per share (2021: 28.90p per
share)). No shares were purchased or disposed of in the current year nor
prior years.
On 30 June 2022, the fair value of the Company's holding of 89,653 (2021:
89,653) ordinary fully paid shares in Ratio, representing 0.04% (2021: 0.04%)
of the issued share capital of the Company, was £6,937 (2021: £14,913)
(7.74p per share (2021: 16.63p per share)).
In November 2020 the Company disposed of all 1,200,000 shares in Ratio for a
consideration of £338,481 (excluding transaction costs) representing 28.20p
per share. In January 2021, the 89,653 Ratio Warrants were exercised and
converted into ordinary shares for a consideration of £27,378.
In November 2020 the Company sold 300,000 of the Ratio Warrants for a
consideration of £15,282 (excluding transaction costs) (5.10p per warrant).
In January 2021, the Company exercised its remaining Ratio Warrants (89,653)
in exchange for Ratio ordinary shares for a consideration of £27,378 (30.54p
per warrant).
On 30 June 2022, the Directors' estimate of the fair value of the Company's
holding of 567,185 (2021: 567,185) shares in Cataleya was £4,670,296 (2021:
£4,105,846) (£8.23 per share (2021: £7.24)). No shares were purchased or
disposed of during the current nor prior years.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
(continued)
On 30 June 2022, the Directors' estimate of the fair value of the Company's
holding of 5,651,270 (2021: 5,651,270) shares in JHI was £2,182,521 (2021:
£9,884,072) (£0.39 per share (2021: £1.75 per share)). No shares were
purchase or disposed of in the current year.
During the prior year the Company purchased 2,087,500 ordinary fully paid
shares in JHI for a total consideration of £3,411,939 which included a share
issue by the Company of 18,290,000 new nil par value ordinary shares as part
consideration for JHI shares received during the prior year (see note 12).
8. OTHER RECEIVABLES AND PREPAYMENTS
2022 2021
£ £
Prepayments 10,146 4,441
9. CASH AND CASH EQUIVALENTS
2022 2021
£ £
Cash at bank 465,501 681,066
Cash at broker 537,589 537,856
1,003,090 1,218,922
10. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS
The Company issued £1,600,000 10% convertible loan notes on 24 October 2018.
The notes were convertible into ordinary shares of the Company, at the option
of the holder, or repayable on 31 March 2021. The conversion price was 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 1(st)
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.
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.
On 31 March 2021 the remaining principal of £400,000 was repaid in full along
with the accrued interest of £56,548.
Interest Principal Total
£ £ £
Total borrowings at 30 June 2020 30,067 362,651 392,718
Repayment of convertible loan notes - (400,000) (400,000)
Interest expense 33,702 - 33,702
Interest paid (56,548) - (56,548)
Movement in fair value on final conversion (7,221) 37,349 30,128
Total borrowings at 30 June 2021 - - -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
10. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
Interest Principal Total
£ £ £
Conversion rights measured at fair value through profit or loss
Opening balance at 1 July 2020 8,876 124,457 133,333
Initial recognition of conversion rights from issue of convertible loan notes - - -
Repayment of convertible loan notes (cancellation of conversion rights) - - -
Movement in fair value (8,876) (124,457) (133,333)
Total derivative financial instruments at 30 June 2021 - - -
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 were recognised as a financial liability measured at fair value
through profit or loss. The remainder of the proceeds was allocated to the
liability which is subsequently recognised on an amortised cost basis until
extinguished on conversion or maturity of the convertible loan notes.
11. TRADE AND OTHER PAYABLES
2022 2021
£ £
Accrued expenses 52,930 39,534
12. STATED CAPITAL
Allotted, called up and fully paid: Ordinary shares Ordinary shares
No. £
1July 2020 125,761,486 13,955,623
Additions 18,290,000 2,696,859
1July 2021 144,051,486 16,652,482
Additions - -
At 30 June 2022 144,051,486 16,652,482
On 9 September 2020, in accordance with the terms of the JHI share purchase
agreements, the Company issued a total of 8,850,000 new nil par value ordinary
shares for 750,000 JHI shares. This represented a non-cash transaction. The
total valuation of the Company's share issue was £1,304,933.
On 14 September 2020, in accordance with the terms of the JHI share purchase
agreements, the Company issued a total of 9,440,000 new nil par value ordinary
shares for 800,000 JHI shares. This represented a non-cash transaction. The
total valuation of the Company's share issue was £1,391,928.
There were no share issues during the year ended 30 June 2022.
There were no share redemptions during the year ended 30 June 2022 (2021:
£Nil).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. SHARE-BASED PAYMENT RESERVE
2022 2021 2017
£ £ £
At 1 July 469,670 443,793 49,906
Share options expense - 25,877 3,000
At 30 June 469,670 469,670
On 6 August 2020 750,000 share options were granted with an exercise price of
17.0 pence per share and an expiration date of 31 July 2023. The options
issued on 3 January 2017 were extended on 1 November 2019 with a new expiry
date of 31 December 2021.
The following assumptions were used to determine the fair value of the options
for 2021:
2021
Weighted average share price at grant date
(pence)
15.00
Exercise price
(pence)
17.0
Expected volatility
(%)
45.8%
Average option life
(years)
7.7
Risk free interest rate
(%)
0.550%
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:
2022 2022 2021 2021
Weighted average exercise price (p) Weighted average exercise price (p)
Number of options Number of options
Outstanding at start of the year 11.25 4,500,000 10.10 3,750,000
Granted during the year - - 17.00 750,000
Expired during the year - (2,250,000) - -
Exercised during the year - - - -
Outstanding at end of the year 15.00 2,250,000 11.25 4,500,000
Exercisable at end of the year 15.00 2,250,000 11.25 4,500,000
2,250,000 of the options expired during the year (30 June 2021: nil).
14. 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,
and cash at bank. The Directors have not hedged this exposure.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
a) Market risk (continued)
i) Foreign exchange risk (continued)
Currency exposure as at 30 June:
Assets and net exposure Assets and net exposure
2022 2021
Currency £ £
US Dollars 5,003,663 4,897,698
Canadian Dollars 2,047,350 9,271,921
Israeli Shekel 6,937 14,913
Total 7,057,950 14,184,532
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 £342,988 (2021: £700,242). 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 2022 7,261,904
Fair Value Through Profit or Loss, as at 30 June 2021 14,465,631
With the exception of JHI and Cataleya, the Company's investments are all
publicly traded and listed on either the AIM, OTCQB or the Tel Aviv Stock
Exchange. A 30% increase in market price would decrease the pre-tax loss for
the year and increase the net assets attributable to ordinary shareholders by
£122,726 (2021: £142,714). A 30% reduction in market price would have
increased the pre-tax loss 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 decrease the
pre-tax loss for the year and increase the net assets attributable to ordinary
shareholders by £2,055,845 (2021: £4,196,975). A 30% reduction in market
price would have increased the pre-tax loss 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 material interest rate risk.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
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:
2022 2021
£ £
Cash and cash equivalents 1,003,090 1,218,922
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.
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 2022
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 52,930 - - 52,930
52,930 - - 52,930
As at 30 June 2021
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 39,534 - - 39,534
39,534 - - 39,534
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
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
Fair Value Estimation (continued)
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).
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.
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.
The following table shows the classification of the Company's financial assets
and liabilities:
Level I Level II Level III Total
£ £ £ £
At 30 June 2022 409,087 - 6,852,817 7,261,904
At 30 June 2021 475,713 - 13,989,918 14,465,631
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 fairly
reflects the value of the investment as at 30 June 2022. Following a recently
completed transaction in JHI the Directors have used this price as their basis
for determining the Company's fair value investment in JHI. There have been no
movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown below:
2022 2021
£ £
At start of the year 13,989,918 10,943,867
Purchases - 3,411,939
Change in fair value (7,137,101) (365,888)
At end of the year 6,852,817 13,989,918
15. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2022 2021 2022 2021
Directors' fees Directors' fees Options outstanding Options outstanding
£ £
DRKing 20,000 20,000 250,000 500,000
DCorcoran - - 1,250,000 1,750,000
GWalsh 20,000 20,000 500,000 1,000,000
TO'Gorman 20,000 20,000 250,000 750,000
MBradlow - - - 500,000
(resigned 11 April 2017)
60,000 60,000 2,250,000 4,500,000
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
15. DIRECTORS' REMUNERATION AND SHARE OPTIONS (continued)
At the year end the Company owed £10,000 (2021: £10,000) in outstanding
Directors' fees.
During the year consultancy fees of £23,694 (2021: £21,517) were paid to D
Corcoran.
On 6 August 2020, 750,000 share options were granted to D Corcoran with an
exercise price of 17.0 pence per share and an expiration date of 31 July 2023.
No options were granted during the current year. No options were exercised
during the current nor prior years.
The shares held by the Directors are declared in the Directors' report.
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.
16. RELATED PARTIES
On 31 March 2021 the convertible loan notes plus accrued interest were repaid
in full in the sum of £456,548 consisting of £400,000 of residual principal
and £56,548 of accrued interest. Details of the convertible loan notes are
disclosed in note 10. The convertible loan notes were held by Mr Walsh.
Canaccord Genuity as a significant shareholder of the Company is considered a
related party under AIM rules. The Company paid £400 in Custody fees to
Canaccord Genuity for the year (2021: £391).
The shares held by the Directors are declared in the Directors' report.
17. CONTROLLING PARTY
In the opinion of the Directors, the Company does not
have a controlling party.
18. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events subsequent to
the year-end that require adjustment or disclosure in the financial
statements.
Net changes in fair value of financial assets designated at fair value through
profit or loss
2022 2021
£ £
Opening cumulative unrealised gain 1,604,358 2,191,024
Net unrealised movement (7,203,727) (586,666)
Cumulative unrealised (loss) / gain on financial assets at fair value through (5,599,369) 1,604,358
profit or loss
2022 2021
£ £
Unrealised loss (7,203,727) (586,666)
Realised loss on disposal of financial assets - (105,622)
Net changes in fair value of financial assets at fair value through profit or (7,203,727) (692,288)
loss
On 30 June 2022, the fair value of the Company's holding of 1,000,000 (2021:
1,000,000) ordinary fully paid shares in Argos, representing 0.43% (2021:
0.43%) of the issued share capital of the company, was £17,400 (2021:
£27,300) (1.74p per share (2021: 2.73p per share)). No shares were purchased
or disposed of in the current nor prior years.
On 30 June 2022, the fair value of the Company's holding of 1,500,000 (2021:
1,500,000) ordinary fully paid shares in Eco Atlantic, representing 0.44%
(2021: 0.75%) of the issued share capital of the
company, was £384,750 (2021: £433,500) (25.65p per share (2021: 28.90p per
share)). No shares were purchased or disposed of in the current year nor
prior years.
On 30 June 2022, the fair value of the Company's holding of 89,653 (2021:
89,653) ordinary fully paid shares in Ratio, representing 0.04% (2021: 0.04%)
of the issued share capital of the Company, was £6,937 (2021: £14,913)
(7.74p per share (2021: 16.63p per share)).
In November 2020 the Company disposed of all 1,200,000 shares in Ratio for a
consideration of £338,481 (excluding transaction costs) representing 28.20p
per share. In January 2021, the 89,653 Ratio Warrants were exercised and
converted into ordinary shares for a consideration of £27,378.
In November 2020 the Company sold 300,000 of the Ratio Warrants for a
consideration of £15,282 (excluding transaction costs) (5.10p per warrant).
In January 2021, the Company exercised its remaining Ratio Warrants (89,653)
in exchange for Ratio ordinary shares for a consideration of £27,378 (30.54p
per warrant).
On 30 June 2022, the Directors' estimate of the fair value of the Company's
holding of 567,185 (2021: 567,185) shares in Cataleya was £4,670,296 (2021:
£4,105,846) (£8.23 per share (2021: £7.24)). No shares were purchased or
disposed of during the current nor prior years.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
(continued)
On 30 June 2022, the Directors' estimate of the fair value of the Company's
holding of 5,651,270 (2021: 5,651,270) shares in JHI was £2,182,521 (2021:
£9,884,072) (£0.39 per share (2021: £1.75 per share)). No shares were
purchase or disposed of in the current year.
During the prior year the Company purchased 2,087,500 ordinary fully paid
shares in JHI for a total consideration of £3,411,939 which included a share
issue by the Company of 18,290,000 new nil par value ordinary shares as part
consideration for JHI shares received during the prior year (see note 12).
8. OTHER RECEIVABLES AND PREPAYMENTS
2022 2021
£ £
Prepayments 10,146 4,441
9. CASH AND CASH EQUIVALENTS
2022 2021
£ £
Cash at bank 465,501 681,066
Cash at broker 537,589 537,856
1,003,090 1,218,922
10. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS
The Company issued £1,600,000 10% convertible loan notes on 24 October 2018.
The notes were convertible into ordinary shares of the Company, at the option
of the holder, or repayable on 31 March 2021. The conversion price was 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 1(st)
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.
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.
On 31 March 2021 the remaining principal of £400,000 was repaid in full along
with the accrued interest of £56,548.
Interest Principal Total
£ £ £
Total borrowings at 30 June 2020 30,067 362,651 392,718
Repayment of convertible loan notes - (400,000) (400,000)
Interest expense 33,702 - 33,702
Interest paid (56,548) - (56,548)
Movement in fair value on final conversion (7,221) 37,349 30,128
Total borrowings at 30 June 2021 - - -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
10. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
Interest Principal Total
£ £ £
Conversion rights measured at fair value through profit or loss
Opening balance at 1 July 2020 8,876 124,457 133,333
Initial recognition of conversion rights from issue of convertible loan notes - - -
Repayment of convertible loan notes (cancellation of conversion rights) - - -
Movement in fair value (8,876) (124,457) (133,333)
Total derivative financial instruments at 30 June 2021 - - -
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 were recognised as a financial liability measured at fair value
through profit or loss. The remainder of the proceeds was allocated to the
liability which is subsequently recognised on an amortised cost basis until
extinguished on conversion or maturity of the convertible loan notes.
11. TRADE AND OTHER PAYABLES
2022 2021
£ £
Accrued expenses 52,930 39,534
12. STATED CAPITAL
Allotted, called up and fully paid: Ordinary shares Ordinary shares
No. £
1 July 2020 125,761,486 13,955,623
Additions 18,290,000 2,696,859
1 July 2021 144,051,486 16,652,482
Additions - -
At 30 June 2022 144,051,486 16,652,482
On 9 September 2020, in accordance with the terms of the JHI share purchase
agreements, the Company issued a total of 8,850,000 new nil par value ordinary
shares for 750,000 JHI shares. This represented a non-cash transaction. The
total valuation of the Company's share issue was £1,304,933.
On 14 September 2020, in accordance with the terms of the JHI share purchase
agreements, the Company issued a total of 9,440,000 new nil par value ordinary
shares for 800,000 JHI shares. This represented a non-cash transaction. The
total valuation of the Company's share issue was £1,391,928.
There were no share issues during the year ended 30 June 2022.
There were no share redemptions during the year ended 30 June 2022 (2021:
£Nil).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
13. SHARE-BASED PAYMENT RESERVE
2022 2021 2017
£ £ £
At 1 July 469,670 443,793 49,906
Share options expense - 25,877 3,000
At 30 June 469,670 469,670
On 6 August 2020 750,000 share options were granted with an exercise price of
17.0 pence per share and an expiration date of 31 July 2023. The options
issued on 3 January 2017 were extended on 1 November 2019 with a new expiry
date of 31 December 2021.
The following assumptions were used to determine the fair value of the options
for 2021:
2021
Weighted average share price at grant date
(pence)
15.00
Exercise price
(pence)
17.0
Expected volatility
(%)
45.8%
Average option life
(years)
7.7
Risk free interest rate
(%)
0.550%
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:
2022 2022 2021 2021
Weighted average exercise price (p) Weighted average exercise price (p)
Number of options Number of options
Outstanding at start of the year 11.25 4,500,000 10.10 3,750,000
Granted during the year - - 17.00 750,000
Expired during the year - (2,250,000) - -
Exercised during the year - - - -
Outstanding at end of the year 15.00 2,250,000 11.25 4,500,000
Exercisable at end of the year 15.00 2,250,000 11.25 4,500,000
2,250,000 of the options expired during the year (30 June 2021: nil).
14. 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,
and cash at bank. The Directors have not hedged this exposure.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
a) Market risk (continued)
i) Foreign exchange risk (continued)
Currency exposure as at 30 June:
Assets and net exposure Assets and net exposure
2022 2021
Currency £ £
US Dollars 5,003,663 4,897,698
Canadian Dollars 2,047,350 9,271,921
Israeli Shekel 6,937 14,913
Total 7,057,950 14,184,532
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 £342,988 (2021: £700,242). 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 2022 7,261,904
Fair Value Through Profit or Loss, as at 30 June 2021 14,465,631
With the exception of JHI and Cataleya, the Company's investments are all
publicly traded and listed on either the AIM, OTCQB or the Tel Aviv Stock
Exchange. A 30% increase in market price would decrease the pre-tax loss for
the year and increase the net assets attributable to ordinary shareholders by
£122,726 (2021: £142,714). A 30% reduction in market price would have
increased the pre-tax loss 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 decrease the
pre-tax loss for the year and increase the net assets attributable to ordinary
shareholders by £2,055,845 (2021: £4,196,975). A 30% reduction in market
price would have increased the pre-tax loss 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 material interest rate risk.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
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:
2022 2021
£ £
Cash and cash equivalents 1,003,090 1,218,922
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.
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 2022
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 52,930 - - 52,930
52,930 - - 52,930
As at 30 June 2021
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 39,534 - - 39,534
39,534 - - 39,534
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
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
Fair Value Estimation (continued)
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).
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.
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.
The following table shows the classification of the Company's financial assets
and liabilities:
Level I Level II Level III Total
£ £ £ £
At 30 June 2022 409,087 - 6,852,817 7,261,904
At 30 June 2021 475,713 - 13,989,918 14,465,631
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 fairly
reflects the value of the investment as at 30 June 2022. Following a recently
completed transaction in JHI the Directors have used this price as their basis
for determining the Company's fair value investment in JHI. There have been no
movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown below:
2022 2021
£ £
At start of the year 13,989,918 10,943,867
Purchases - 3,411,939
Change in fair value (7,137,101) (365,888)
At end of the year 6,852,817 13,989,918
15. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2022 2021 2022 2021
Directors' fees Directors' fees Options outstanding Options outstanding
£ £
D R King 20,000 20,000 250,000 500,000
D Corcoran - - 1,250,000 1,750,000
G Walsh 20,000 20,000 500,000 1,000,000
T O'Gorman 20,000 20,000 250,000 750,000
M Bradlow - - - 500,000
(resigned 11 April 2017)
60,000 60,000 2,250,000 4,500,000
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
15. DIRECTORS' REMUNERATION AND SHARE OPTIONS (continued)
At the year end the Company owed £10,000 (2021: £10,000) in outstanding
Directors' fees.
During the year consultancy fees of £23,694 (2021: £21,517) were paid to D
Corcoran.
On 6 August 2020, 750,000 share options were granted to D Corcoran with an
exercise price of 17.0 pence per share and an expiration date of 31 July 2023.
No options were granted during the current year. No options were exercised
during the current nor prior years.
The shares held by the Directors are declared in the Directors' report.
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.
16. RELATED PARTIES
On 31 March 2021 the convertible loan notes plus accrued interest were repaid
in full in the sum of £456,548 consisting of £400,000 of residual principal
and £56,548 of accrued interest. Details of the convertible loan notes are
disclosed in note 10. The convertible loan notes were held by Mr Walsh.
Canaccord Genuity as a significant shareholder of the Company is considered a
related party under AIM rules. The Company paid £400 in Custody fees to
Canaccord Genuity for the year (2021: £391).
The shares held by the Directors are declared in the Directors' report.
17. CONTROLLING PARTY
In the opinion of the Directors, the Company does not
have a controlling party.
18. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events subsequent to
the year-end that require adjustment or disclosure in the financial
statements.
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