Westmount Energy Ld - Final Results & Notice of AGM
30/10/2020 07:00
RNS Number : 6941D
Westmount Energy Limited
30 October 2020
30 October 2020
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the year ended 30 June 2020, and hereby gives notice that the Annual General Meeting of Westmount Energy Limited will be held at No 2 The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel Islands on 11 December 2020 at 11.00.
Copies of the Company's results and Notice of AGM are available on the Company's website, www.westmountenergy.com, and will be posted to shareholders today.
CHAIRMAN'S REVIEW
2020 Highlights
· Supplementary investments made in the prolific Guyana-Suriname Basin where 24 discoveries have been reported since 2015
· Commencement of multi-well, ExxonMobil operated, drilling campaign on the Kaieteur and Canje Blocks - with spud of Tanager-1 in August 2020
· Fundraising (at 13 pence per share) yields £5.57M facilitating additional investment in Cataleya Energy Corporation
· Two 'JHI-WTE share swap' transactions executed at implied Westmount share price of 14.745 pence per share
· Partial repayment of the 2021 10% Convertible Loan Notes capital and interest by way of the issue of new shares at 14.93P per share
· Strong cash balances of £2.4M at year end.
· Focus remains on opportunistic deployment of capital in the Guyana-Suriname Basin
The year under review was another year of progress for your Company as we continued to build our indirect investment exposure to the Guyana-Suriname Basin. After four years of patiently scaling up our investment positions we have now reached the point where the Exxon Mobil drilling programme on the Kaieteur and Canje blocks, offshore Guyana, has commenced, with the Tanager 1 well on the Kaieteur block currently drilling and a further two wells expected on the Canje Block over the next six to nine months. With independent geological risks across 2 different blocks, these 3 ExxonMobil operated wells provide some risk diversification and a portfolio effect. The spudding of an additional exploration well, operated by Tullow Oil, is anticipated in Block 47, Suriname, during Q1 2021. The outcome of these initial 4 wells is likely to determine the follow-on drilling programs and ultimately the value of our investments in JHI Associates Inc., Cataleya Energy Corp. and Ratio Petroleum.
GUYANA-SURINAME BASIN
As reported at the interim stage, Guyana became South America's newest oil producing nation with first oil from the Liza Phase I development being delivered, in December 2019, less than 5 years after discovery. Field production is currently ramping up to its plateau rate of 120,000 barrels of oil per day. Further field developments are underway at Liza Phase II and Payara, where government approval and Final Investment Decision have recently been achieved, with follow-on anticipated projects at Yellowtail and Hammerhead, at various stages of design, engineering and project sanction. In aggregate this pipeline of development projects is reported to offer the potential for Guyana to be producing circa 750,000 BOD by 2026.
Notwithstanding the global economic backdrop, and some COVID-19 related disruption, exploration drilling has also continued apace in the basin. The discovered and potential resource continues to grow, with stacked petroleum systems, emerging new plays and deeper hydrocarbons confirming the upside potential within this prolific basin. During the last twelve months ExxonMobil and partners on the Stabroek Block have reported five additional light oil discoveries (Tripletail-1, Mako-1, Uaru-1, Yellowtail-2, and Redtail-1) with the discovered Stabroek resource inventory now standing at approximately 9 Bn Boe. This brings the total number of discoveries, to date, on the Stabroek Block to 18 from the 20 exploration wells drilled since 2015 (a prodigious success rate of 90%).
In January 2020 Apache and Total reported a substantial, stacked-pay, hydrocarbon discovery (Maka Central-1) which extended the Upper Cretaceous play fairways to the southeast into Block 58, Suriname. This discovery well has been followed up by two further significant stacked-pay discoveries, to the southeast of Maka Central-1, at Sapakara West-1 and Kwaskwasi-1. All three discoveries reported light oil and gas-condensate pay in the shallower Campanian reservoirs overlying light oil pay in deeper Santonian reservoirs. These deeper Santonian pools on Block 58, in conjunction with the deeper hydrocarbons reported at Tripletail-1 and Yellowtail-2, on the Stabroek Block, suggest an extensive emerging deeper play fairway within the basin.
These drilling results continue to support the presence of quality reservoirs, multiple source rocks and multiple phases of hydrocarbon expulsion - indicating the potential for stacked-pay drilling opportunities within the basin. A total of 5 plays have now been proven though the Upper Cretaceous Liza play dominates in terms of number of discoveries and discovered volumes to date.
COVID 19
The COVID 19 pandemic continues to cause significant disruption to global health security and economies - as governments seek to find a balance between addressing public health concerns via restrictions on movement of people versus preservation of economic activity through the injection of economic stimuli. While the immediate impact of the pandemic on the sector resulted in a sharp drop in demand for oil, the reopening of economies has allowed oil prices to recover to around $40-$45 per barrel (Brent) from the record lows earlier this year. Nevertheless, uncertainty remains the order of the day as a second wave of the virus has the potential to retard economic recovery through ad hoc travel restrictions, quarantine and local lockdowns. It is hoped that these temporary measures will 'bridge the gap' and help find the correct balance while we await the arrival of effective therapeutics and a vaccine.
Notwithstanding some initial COVID 19 related disruptions, during the March-May 2020 period, exploration drilling has continued in the Guyana-Suriname Basin. Currently, there are five drillships operating within the basin between development and exploration drilling operations, with four of these drillships operating offshore Guyana. The Tanager-1 well was spudded on the 11th August 2020, using the Stena Carron drillship, and will be the deepest well drilled in the basin to date, with an estimated target total depth of circa 8,000 metres. Continuing drilling activity in the basin is likely to be driven by the industry's focus on 'advantaged barrels' as a result of the unique combination of prospect sizes, reservoir quality, low carbon intensity and low breakeven metrics, available offshore Guyana. These characteristics offer the potential to sustain Guyana as an investment growth area in spite of COVID 19 related issues and general industry headwinds.
JHI Associates Inc ("JHI")
Over the past 6 months Westmount Energy Ltd. ("WTE") has increased its stake in JHI from 3% to 6.9% of the issued share capital through the execution of two JHI-WTE share swap transactions at an implied WTE share price of 14.745 pence. Firstly, during the period, your Company announced, on 13th May 2020, that it had increased its equity position in JHI from approximately 3% to 4.8% via the purchase of 1,350,000 common shares in JHI Associates Inc., by way of the issue of 15,930,000 new ordinary shares of no par value in Westmount. Post the financial year end, on September 10, 2020 Westmount announced that it had purchased a further 1,550,000 common shares in JHI Associates Inc. by way of the issue of 18,290,000 new ordinary shares of no par value in Westmount which brought our holding in JHI to 5,113,770 shares, representing approximately 6.9% of the issued common shares in JHI. As a result of the above transactions, JHI is now our largest investment constituting approximately 61% of Company's portfolio based on the current balance sheet1.
As previously reported, JHI is a private, Ontario-registered, company established in 2014 and focused on oil exploration opportunities in the emerging Guyana-Suriname Basin. The company's main asset is a 17.5% carried interest in the Canje Block covering over 4,800 square kilometres, offshore Guyana. This block is located adjacent to and in the same geologic basin as the Stabroek Block which has delivered eighteen substantial oil discoveries since 2015, with reported discovered recoverable resources of approximately 9 billion oil-equivalent barrels to date.
ExxonMobil, which is the operator of both blocks, acquired in excess of 6,100 km2 of 3D seismic on the Canje Block in 2016. Subsequent processing and interpretation of this dataset has been used to define a substantial prospect inventory on the Block with three prospects (Bulletwood, Jabillo, and Sapote) high-graded as potential targets for the initial drilling campaign. A 2018 DeGoyler McNaughton Competent Persons Report on the Canje Block remains unpublished. However, the block is reported by JHI2 to contain more than a dozen prospects in the Canje portion of the Liza play fairway, representing more than 10 billion barrels of prospective recoverable oil resources, with a number of the prospects exhibiting the same DHI (Direct Hydrocarbon Indicator) characteristics as the neighbouring Stabroek discoveries. As a result of a 2018 farm-out to Total, JHI is carried for the drilling of up to four wells and is funded for the drilling of additional wells.
It is anticipated that the first well on the Canje Block, Bulletwood-1, will be spudded in November/December 2020.The Bulletwood-1 prospect is reported to be a 'Liza look-alike' confined channel complex and will target prospective resources of circa 500 MMbbls3 of oil. The second well on the Canje Block will target either Sapote-1 in the east of the block or Jabillo-1, in the northwest of the block, which is reported as a billion-barrel class basin floor turbidite fan.
1Percentage of current Guyana-Suriname portfolio NAV using financial values reported on Balance Sheet date 30th June 2020 (with post balance sheet share purchases referenced to that date) 2JHI Published Interview - 121Oil & Gas Investment Conference, London, 2018
3JHI Website - www.jhiassociates.com
Cataleya Energy Corporation ("CEC")
During the financial reporting period Westmount acquired an additional 313,500 common shares in Cataleya Energy Corporation ("CEC") for total consideration of US$3,135,000 (equivalent to GBP £2,574,321) including transaction costs. Westmount currently holds a total of 567,185 common shares in CEC, representing approximately 5.35% of the fully diluted share capital of CEC, as of the 30th August 2019.
As previously reported CEC is a private, Canadian registered company established in 2015 and focused on oil exploration opportunities in the emerging Guyana-Suriname Basin. CEC's main asset is a 25% participating interest in the Kaieteur Block, which it holds through its wholly owned subsidiary Cataleya Energy Limited ("CEL"). The 13,500 km2 Kaieteur Block is located outboard of, and adjacent to, the Ranger Oil Discovery which is located on the Stabroek Block, offshore Guyana.
A Netherland, Sewell & Associates Inc.("NSAI") CPR, published in May 2019, provides estimates of the unrisked prospective oil resources in 9 prospects located on the 5,750 km2 3D seismic survey acquired in the southern part of the Kaieteur Block in 2017. This 3D survey covers circa 42% of the total area of the Kaieteur Block. 'Best Estimate' of Unrisked Gross Prospective Oil Resources for individual prospects ranges from 76.1 MMBBLs (Towa-Towa Prospect) to 702.7 MMBBLs (Toucan Prospect). Aggregate 'Best Estimate' Gross Unrisked Prospective Resources for these 9 prospects is 2.1 BnBBLs (Aggregate Low to High Estimates 694 MMBBLs to 5.85 BnBBLs) implying Net (25%) 525 MMBBLs to CEC across the area of the Kaieteur 3D seismic survey.
On 11th August 2020, the Stena Carron drillship commenced operations on location at the Tanager-1 wellsite- the first well selected for drilling on the Kaieteur Block, offshore Guyana.
The Kaieteur Block is currently operated by an ExxonMobil subsidiary, Esso Production & Exploration Guyana Limited (35%), with CEL (25%), Ratio Guyana Limited (25%) and a subsidiary of Hess Corporation (15%) as partners.
Ratio Petroleum Energy Limited Partnership ("Ratio Petroleum")
Your company holds 1,200,000 units in Ratio Petroleum, representing a c .0.7% interest in the issued share capital of Ratio Petroleum which holds a 25% participating interest in the Kaieteur Block, offshore Guyana.
The Tanager-1 well which was spudded on the 11th August 2020, has a target total depth of 8,000 metres and will take an estimated 90 days to drill. It will be the deepest well drilled in the Guyana-Suriname Basin to date. The May 2019 Netherland, Sewell & Associates Inc. ("NSAI") report on the Kaieteur Block describes the Tanager Prospect as a stacked reservoir prospect (Maastrichtian to Turonian reservoir intervals) and assigns a 'Best Estimate' Unrisked Gross (100%) Prospective Oil Resource of 256.2 MMBBLs to the prospect (Low to High Estimates 135.6 MMBBLs to 451.6 MMBBLs), with an aggregate Probability of Geologic Success (POSg) of 72%.
Ratio Petroleum also holds a 20% interest in Block 47 offshore Suriname where operator Tullow is planning to use the Stena Forth drillship to drill the Goliathberg-Voltzberg North-1 ("GVN-1") well, in Q1 2021.The GVN-1 well has a target total depth of 5,400 metres and will take an estimated 60 days to drill. The NSAI report on Block 47, published in June 2019, indicates that the GVN Prospect is a stacked reservoir prospect (Turonian to Cenomanian reservoir intervals) and assigns a 'Best Estimate' Unrisked Gross (100%) Prospective Oil Resource of 234.7 MMBBLs to the prospect (Low to High Estimates 35 MMBBLs to 937.9 MMBBLs), with an aggregate Probability of Geologic Success (POSg) of 34%.
Eco (Atlantic) Oil & Gas ("EOG")
Westmount holds 1,500,000 common shares in EOG representing c 0.8% of the common shares in issue. In addition to a portfolio of Namibian interests, EOG hold a 15% interest in the Orinduik Block offshore Guyana, which is adjacent to the Stabroek Block.
During August and September 2019, Tullow and the Orinduik Block partners reported two heavy oil discoveries (Jethro-1 and Joe-1 respectively) in separate Tertiary age reservoirs. Subsequently, in January 2020, Tullow reported a light oil discovery (Carapa-1), in Upper Cretaceous reservoirs, on the neighbouring Kanuku Block. The commercial potential of these discoveries remains to be fully evaluated.
Westmount originally invested in EOG to gain exposure to the drilling outcomes of the substantial Upper Cretaceous targets on the Orinduik block. The Gustavson Associates CPR, published in February 2020 indicates the presence of at least four Upper Cretaceous prospects on the Orinduik Block that are assessed to individually contain Gross Unrisked Prospective Resources (P50) in excess of 500 MMboe. Tullow and the Orinduik block partners are currently reported to be reprocessing 3D seismic and updating their geologic models by integrating the results of the Jethro-1, Joe-1 and Carapa-1 wells. EOG reported in its mid-year results that it remains fully funded for its pro-rata share of up to 3 wells costing USD $40M each.
Financials
The financial results show an operating loss of £111,493 for the year. As previously announced, in August 2019, £5.573M was raised by way of placings with new and existing shareholders at 13 pence per share. In November 2019 we announced the repayment of £327K of the 2021 10% Convertible Loan Notes ('CLNs') capital and interest by way of the issue of new shares at 14.93P per share. At year end, the outstanding CLNs amounted to £400K. The company remains well capitalised with a low-cost base and had strong cash balances of £2.435M at the year end. The Board continues to be focused on opportunistic deployment of capital to gain additional exposure for our shareholders to the Guyana-Suriname offshore exploration space. We continue to seek a range of opportunities including the scaling of our existing investments where opportunity and price discipline allow.
Summary/Outlook
Westmount is currently well positioned with a focused investment portfolio providing exposure to large Upper Cretaceous prospects and near-term ExxonMobil operated drilling outcomes, in this prolific basin. Results of the Tanager 1 well are expected in November. It is anticipated that drilling operations at Bulletwood-1, the first of two exploration wells on the Canje Block, will follow shortly thereafter. (Given that our investment portfolio is currently weighted towards JHI, our largest investment, the drilling outcomes of these two ExxonMobil operated wells on Canje will be particularly significant for Westmount shareholders). The Tullow operated Goliathberg-Voltzberg North-1 well is scheduled for drilling in Q1 2021. With exposure to the drilling outcomes of this four well portfolio and potential additional exploration drilling dependent on the above well results, the following 6 to 12 months should provide lots of excitement for shareholders. We are hopeful that our strategy of a portfolio approach - with large Upper Cretaceous prospects, independent geological risks and a compressed timeframe for drilling - offers the potential for significant value changes, during the next year, in the success case.
As the only AIM quoted company offering exposure to the ExxonMobil operated drilling programmes on Canje and Kaieteur, Westmount shareholders are uniquely positioned.
We will update shareholders when we have received drilling results from our investee companies and in the interim I wish all shareholders and stakeholders the best of luck.
GERARD WALSH
Chairman
29 October 2020
For further information, please contact:
Westmount Energy Limited www.westmountenergy.com
David King, Director Tel: +44 (0) 1534 823059
Anita Weaver
Cenkos Securities plc (Nomad and Broker) Tel: +44 (0) 20 7397 8900
Nicholas Wells/Harry Hargreaves (Corporate Finance)
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2020
| The Directors present their annual report and the audited financial statements of Westmount Energy Limited (the "Company") for the year ended 30 June 2020. | |||||||||||||||||||||||||||||||||||||||
| PRINCIPAL ACTIVITIES | |||||||||||||||||||||||||||||||||||||||
| The principal activity of the Company is, and continues to be, an energy investment company. Development of the Company's activities and its prospects are reviewed in the Chairman's Review on pages 3 to 6. | |||||||||||||||||||||||||||||||||||||||
| The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM"). | |||||||||||||||||||||||||||||||||||||||
| DIRECTORS AND DIRECTORS' INTERESTS | |||||||||||||||||||||||||||||||||||||||
The Directors who served during the year and subsequently to the date of this report were as follows:
| |||||||||||||||||||||||||||||||||||||||
| Since 30 June 2020 Mr Corcoran has been granted a further 750,000 options and at the date of this report holds beneficial interest in 1,750,000 options. See note 19 - Subsequent Events. | |||||||||||||||||||||||||||||||||||||||
| RESULTS AND DIVIDENDS | |||||||||||||||||||||||||||||||||||||||
| The result for the year is set out on page 16 in the Statement of Comprehensive Income. The Directors do not recommend the payment of a dividend in respect of these financial statements (2019: £Nil). CHARITABLE DONATION During the year the Company made a charitable donation to the Guyana Cancer Prevention Society ("the Society") of USD10,000. The donation was used to co-fund Phase 1 of the Society's pilot HPV Virus/Cervical Cancer screening study. | |||||||||||||||||||||||||||||||||||||||
| DIRECTORS' BIOGRAPHICAL INFORMATION | |||||||||||||||||||||||||||||||||||||||
| Gerard Walsh, Chairman, age 57, a Swiss resident, is a member of the Chartered Institute of Management Accountants and has been involved in financing oil and gas companies for over 20 years. Mr Walsh maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector. David R King,age 62, a Jersey resident, is a Fellow of the Institute of Chartered Accountants in England and Wales and has over 25 years' experience in capital markets and cross border structuring gained from senior positions in a number of offshore jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg and Jersey. He is an experienced professional Non-Executive Director and is regulated personally by the Jersey Financial Services Commission. He maintains his knowledge and skills via fulfilment of regular continuing professional development obligations and by close monitoring of significant market activities within the sector. Mr King acts as an independent director and oversees the efficient operation of Company Secretarial, Registrar and Administrative operations of the Company. Thomas P O'Gorman,age 68, a Northern Ireland resident, is a long term investor in the resource sector and is the former Chairman of Cove Energy Plc (formerly Lapp Platts Plc) who has been involved in financing oil and gas companies for over 40 years. Mr O'Gorman maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector. DIRECTORS' REPORT (continued) FOR THE YEAR ENDED 30 JUNE 2020 Dermot Corcoran, age 61, a Republic of Ireland resident, is a petroleum geologist and geophysicist, with more than 30 years' experience working with both major and minor hydrocarbon exploration companies globally. Mr Corcoran has wide experience in technical and commercial aspects of petroleum exploration and production, gained from employment and investment experience in Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and the USA. Mr Corcoran maintains his knowledge and skills via direct contact with senior industry investors and other operators, attendance and engagement at industry conferences and seminars and via monitoring of significant market activities within the global energy sector. | |||||||||||||||||||||||||||||||||||||||
| SECRETARY | |||||||||||||||||||||||||||||||||||||||
| The Secretary of the Company is Stonehage Fleming Corporate Services Limited. | |||||||||||||||||||||||||||||||||||||||
| AUDITOR | |||||||||||||||||||||||||||||||||||||||
| The auditor, Moore Stephens Audit & Assurance (Jersey) Limited, has indicated its willingness to continue in office, and a resolution that it is re-appointed will be proposed at the next annual general meeting. | |||||||||||||||||||||||||||||||||||||||
| STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||
| The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. | |||||||||||||||||||||||||||||||||||||||
| Jersey Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) and applicable law. Under Company law the Directors must prepare financial statements that give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: | |||||||||||||||||||||||||||||||||||||||
| · select suitable accounting policies and then apply them consistently; | |||||||||||||||||||||||||||||||||||||||
| · make judgements and accounting estimates that are reasonable and prudent; | |||||||||||||||||||||||||||||||||||||||
| · state whether the financial statements have been prepared in accordance with IFRS as adopted by the European Union; and | |||||||||||||||||||||||||||||||||||||||
| · prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. | |||||||||||||||||||||||||||||||||||||||
| The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. | |||||||||||||||||||||||||||||||||||||||
| As far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware and each Director has taken all the steps that he ought to have undertaken as a director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The Company's website is maintained in compliance with AIM Rule 26. | |||||||||||||||||||||||||||||||||||||||
| Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. | |||||||||||||||||||||||||||||||||||||||
| The Directors confirm that they have complied with all of the above requirements in preparing these financial statements. On behalf of the Board | |||||||||||||||||||||||||||||||||||||||
| D R KING | |||||||||||||||||||||||||||||||||||||||
| Director 29 October 2020 | |||||||||||||||||||||||||||||||||||||||
| Year ended 30 June 2020 | Year ended 30 June 2019 | ||||
| Notes | £ | £ | |||
| Net fair value gains on financial assets held at fair value through profit or loss | 8 | 201,252 | 2,654,137 | ||
| Net fair value gains/(losses) on financial liabilities held at fair value through profit or loss Impairment of intangible assets Finance costs Administrative expenses | 6 7 4 | 75,419 (33,333) (54,575) (301,309) | (183,753) (66,667) (79,987) (229,462) | ||
| Share options credit/expense | 14 | 1,053 | (80,853) | ||
| Operating (loss)/profit | (111,493) | 2,013,415 | |||
| (Loss)/profit before tax | (111,493) | 2,013,415 | |||
| Tax | 3 | - | - | ||
| (Loss)/profit after tax | (111,493) | 2,013,415 | |||
| Other comprehensive income | - | - | |||
| Total comprehensive (loss)/profit for the year | (111,493) | 2,013,415 | |||
| Basic earnings per share (pence) continuing and total operations | 5 | (0.11) | 3.83 | ||
| Diluted earnings per share (pence) continuing and total operations | 5 | (0.11) | 3.51 | ||
| The Company has no items of other comprehensive income. | |||||
| As at | As at | ||||||||||
| 30 June 2020 | 30 June 2019 | ||||||||||
| Notes | £ | £ | |||||||||
| ASSETS | |||||||||||
| Non-current assets | |||||||||||
| Intangible assets | 6 | - | 33,333 | ||||||||
| Financial assets held at fair value through profit or loss | 8 | 12,079,736 | 6,745,797 | ||||||||
| 12,079,736 | 6,779,130 | ||||||||||
| Current assets | |||||||||||
| Receivables | 9 | - | 7,001 | ||||||||
| Cash and cash equivalents | 10 | 2,435,664 | 63,374 | ||||||||
| 2,435,664 | 70,375 | ||||||||||
| Total assets | 14,515,400 | 6,849,505 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Non-current liabilities | |||||||||||
| Derivative financial instruments | 11 | - | 221,411 | ||||||||
| Borrowings | 11 | - | 598,375 | ||||||||
| - | 819,786 | ||||||||||
| Current liabilities | |||||||||||
| Trade and other payables Derivative financial instruments Borrowings | 12 11 11 | 46,406 133,333 392,718 | 45,422 3,592 50,967 | ||||||||
| 572,457 | 99,981 | ||||||||||
| Total Liabilities | 572,457 | 919,767 | |||||||||
| EQUITY | |||||||||||
| Stated capital | 13 | 13,955,623 | 5,829,872 | ||||||||
| Share based payment reserve | 14 | 443,793 | 444,846 | ||||||||
| Retained earnings | (456,473) | (344,980) | |||||||||
| Total equity | 13,942,943 | 5,929,738 | |||||||||
| Total liabilities and equity | 14,515,400 | 6,849,505 | |||||||||
| These financial statements were approved and authorised for issue by the Board of Directors on 29 October 2020 and were signed on its behalf by: | |||||||||||
| D R King | |||||||||||
| Director 29 October 2020 | |||||||||||
| Stated | Share-based | Retained | Total | |||
| Notes | capital | payment reserve | earnings | equity | ||
| £ | £ | £ | £ | |||
| As at 1 July 2018 | 4,244,166 | 363,993 | (2,358,395) | 2,249,764 | ||
| Comprehensive income | ||||||
| Total Comprehensive income for the year ended 30 June 2019 | - | - | 2,013,415 | 2,013,415 | ||
| Share issue | 13 | 1,585,706 | - | - | 1,585,706 | |
| Transactions with owners | ||||||
| Share options expense | 14 | - | 80,853 | - | 80,853 | |
| As at 30 June 2019 | 5,829,872 | 444,846 | (344,980) | 5,929,738 | ||
| Comprehensive income | ||||||
| Total Comprehensive loss for the year ended 30 June 2020 | - | - | (111,493) | (111,493) | ||
| Share issue | 13 | 8,125,751 | - | - | 8,125,751 | |
| Transactions with owners | ||||||
| Share options credit | 14 | - | (1,053) | - | (1,053) | |
| As at 30 June 2020 | 13,955,623 | 443,793 | (456,473) | 13,942,943 |
| Year ended 30 June 2020 | Year ended 30 June 2019 | ||||
| Notes | £ | £ | |||
| Cash flows from operating activities | |||||
| (Loss)/profit for the year | (111,493) | 2,013,415 | |||
| Adjustments for: | |||||
| Net gain on financial assets at fair value through profit or loss | (201,252) | (2,654,137) | |||
| Net (loss)/gain on financial liabilities at fair value through profit or loss | (75,419) | 183,753 | |||
| Impairment of intangible assets | 6 | 33,333 | 66,667 | ||
| Interest on borrowings | 54,575 | 79,987 | |||
| Share options credit/expense | 14 | (1,053) | 80,853 | ||
| Movement in other receivables | 7,001 | 1,212 | |||
| Movement in trade and other payables | 984 | 2,252 | |||
| Proceeds from sale of investments | - | 1,499,100 | |||
| Purchase of investments | (5,132,689) | (3,317,515) | |||
| Net cash used in operating activities | (5,426,013) | (2,044,413) | |||
| Cash flows from financing activities | |||||
| Proceeds from borrowings | 11 | - | 1,600,000 | ||
| Interest and charges on borrowings | 11 | - | (49,395) | ||
| Proceeds from issue of ordinary shares | 13 | 7,798,303 | - | ||
| Net cash generated from financing activities | 7,798,303 | 1,550,605 | |||
| Net increase/(decrease) in cash and cash equivalents | 2,372,290 | (493,808) | |||
| Cash and cash equivalents at beginning of year | 63,374 | 557,182 | |||
| Cash and cash equivalents at end of year | 10 | 2,435,664 | 63,374 |
| 1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Westmount Energy Limited (the "Company") operates solely as an energy investment company. The investment strategy of the Company is to invest in and provide follow on capital to small and medium sized companies that have significant growth possibilities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM"). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Preparation The financial statements are prepared on a going concern basis in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and applicable legal and regulatory requirements of the Companies (Jersey) Law 1991. The financial statements have been prepared under the historical cost convention as modified by the valuation of financial assets held at fair value through profit or loss. The financial statements have been prepared on a going-concern basis as, in the opinion of the Directors, the Company has adequate resources to continue for the foreseeable future and while the COVID-19 pandemic caused a drop in oil prices towards the end of the financial year, the sector is recovering well and going forward is not anticipated to have a material impact on the exploration drilling the Company invests in. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. ACCOUNTING POLICIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The significant accounting policies that have been applied in the preparation of these financial statements are summarised below. These accounting policies have been used throughout all periods presented in the financial statements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Standards, amendments and interpretations to existing standards that are effective and have been adopted by the Company The Company has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2019: - Amendments to IFRS 9 Financial Instruments - Annual improvements to IFRS standards 2015-2017 cycle IFRS 16 Leases is not applicable as the Company has not entered into any lease arrangements. The adoption of the new standard and revisions to the requirements of IFRSs did not result in material changes to the Company's accounting policies or financial statements. New standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company At the date of authorisation of these financial statements there are no other standards that are not yet effective and that would be expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Use of estimates and judgements The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and the exercise of judgement by management while applying the Company's accounting policies in relation to the impairment of intangible assets, value of options issued and derivative financial instruments, as set out in notes 6, 11 and 15. Derivative financial instruments, which are embedded in the convertible loan notes issued by the Company, have been presented separately from the host contract. The bifurcation of the embedded derivative financial instruments requires judgement by management to estimate the fair value of the derivatives on initial recognition of the financial instrument. The valuation and subsequent impairment reviews of the Company's intangible assets requires the use NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 2. ACCOUNTING POLICIES (continued) Use of estimates and judgements (continued) of accounting estimates and judgement by the management. These estimates are based on the management's best knowledge of the events which existed at the date of issue of the financial statements and at the statement of financial position date however, the actual results may differ from these estimates Financial assets at fair value through profit and loss that are not listed have been valued in accordance with IFRS using the International Private Equity and Venture Capital ("IPEVC") Guidelines and information received from the investment entity. The inputs to value these assets require significant estimates and judgements to be made by the Directors. Functional and presentation currency The functional currency of the Company is United Kingdom Pounds Sterling ("Sterling"), the currency of the primary economic environment in which the Company operates. The presentation currency of the Company for accounting purposes is also Sterling. Foreign currency monetary assets and liabilities are translated into Sterling at the rate of exchange ruling on the last day of the Company's financial year. Foreign currency non-monetary items that are measured at fair value in a foreign currency are translated into Sterling using the exchange rates at the date when the fair value was determined. Foreign currency transactions are translated at the exchange rate ruling on the date of the transaction. Gains and losses arising on the currency translation are included in administrative expenses in the Statement of Comprehensive Income in the year in which they arise. Financial instruments Financial assets and financial liabilities are recognised when the Company becomes party to the contractual provisions of the instrument. (a) Classification The Company classifies its financial assets in the following measurement categories: - those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss); and - those to be measured at amortised cost. The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. The Company determines the classification of its financial assets and financial liabilities at initial recognition. Financial liabilities which are not financial liabilities held at fair value through profit or loss are classified as other financial liabilities and held at amortised cost. (b) Recognition and measurement Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the statement of comprehensive income. Subsequent to initial recognition, financial assets at fair value through profit or loss are re-measured at fair value. For listed investments, fair value is determined by reference to stock exchange quoted market bid prices at the close of business at the end of the reporting year, without deduction for transaction costs necessary to realise the asset. For non-listed investments fair value is determined by using recognised valuation methodologies, in accordance with the IPEVC Guidelines. Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the statement of comprehensive income in the period in which they arise. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 2. ACCOUNTING POLICIES (continued) (b) Recognition and measurement (continued) Subsequent measurement of the Company's debt instruments depends on the model for managing the asset and the cash flow characteristics of the asset. The Company measures debt instruments at amortised cost if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. The Company recognises any impairment loss on initial recognition and any subsequent movement in the impairment provision in the statement of comprehensive income, see Note 6. Debt instruments which do not represent solely payments of principal and interest are measured at fair value through profit or loss. Financial liabilities, which includes borrowings, are measured at amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Financial liabilities at fair value through profit or loss are re-measured at fair value. The fair value of the derivative financial instruments is determined by reference to stock exchange quoted market bid prices at the close of business at the end of the reporting year, without deduction for transaction costs incurred by the Company on realisation of the liability, see note 11. Gains or losses arising from changes in fair value of financial liabilities at fair value through profit or loss are presented in the statement of comprehensive income in the period in which they arise. (c) Impairment Under IFRS 9, the new impairment model requires the recognition of impairment provisions based on expected credit losses ("ECL") rather than only incurred credit losses as was the case under IAS 39. IFRS 9 permits a simplified approach to trade and other receivables which allows the Company to recognise the loss allowance at initial recognition and throughout its life at an amount equal to lifetime ECL. ECL are a probability-weighted estimate of credit losses. A credit loss is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive discounted at the original effective interest rate. ECL consider the amount and timing of payments, thus a credit loss arises even if the entity expects to be paid in full but later than when contractually due. The historical default rate has been considered by the Directors and there is no history of bad debt. Under IFRS 9 ECL Model as well, which is forward looking, all factors that could contribute to expected future losses have been considered by the Directors and there is no expectation of credit loss in the future. As such the Directors concluded that there is no material impact on the financial statements. (d) Derecognition A financial asset or part of a financial asset is derecognised when the rights to receive cash flows from the asset have expired and substantially all risks and rewards of the asset have been transferred. The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible assets Separately acquired Net Profit Interest licences ("NPI licences") are classified as intangible assets and are shown at historical cost. Such NPI licences, which are not subject to amortisation, allow the Company to benefit from exploration and extraction of energy resources, if successful, from investee companies granting such NPI licences. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 2. ACCOUNTING POLICIES (continued) Intangible assets (continued) The value of the NPI licences are assessed periodically for possible impairment when events indicate that the fair value of the intangible asset may be below the Company's carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in net profit or loss on financial assets held at fair value through profit or loss. In making the determination as to whether a decline is other than temporary, the Company considers such factors as the duration and extent of the decline, the investee company's financial performance, and the Company's ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the NPI licences' market value. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held on call with banks and cash with broker. For the purpose of the Statement of Cash Flows, cash and cash equivalents are considered to be all highly liquid investments with maturity of three months or less at inception. Equity, reserves and dividend payments Ordinary shares are classified as equity. Transaction costs associated with the issuing of shares are deducted from stated capital. Retained earnings include all current and prior period retained profits. Shares are classified as equity when there is no obligation to transfer cash or other assets. Expenditure The expenses of the Company are recognised on an accruals basis in the Statement of Comprehensive Income. Share options Equity-settled share-based payment transactions are measured at the fair value of the goods and services received unless that cannot be reliably estimated, in which case they are measured at the fair value of the equity instruments granted. Fair value is measured at the grant date and is estimated using valuation techniques as set out in note 15. The fair value is recognised in the Statement of Comprehensive Income, with a corresponding increase in equity via the share option account. When options are exercised, the relevant amount in the share option account is transferred to stated capital. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. TAXATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Company is subject to income tax at a rate of 0%. The Company is registered as an International Services Entity under the Goods and Services Tax (Jersey) Law 2007 and a fee of £200 has been paid, which has been included in administrative expenses. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. ADMINISTRATIVE EXPENSES
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| Current year loss The calculation of diluted earnings per share is not required this year as a loss for the year is not diluted. The calculations have been left in for information. The table below presents information on the profit attributable to the shareholders and the weighted average number of shares used in the calculating the basic and diluted earnings per share. | |||
| 2020 | 2019 | ||
| Basic earnings per share | £ | £ | |
| (Loss)/profit attributable to the shareholders of the Company | (111,493) | 2,013,415 | |
| Diluted earnings per share | |||
| (Loss)/profit attributable to the shareholders of the Company: | |||
| Used in calculating basic earnings per share | (111,493) | 2,013,415 | |
| Add interest expense | 54,575 | 79,987 | |
| Less fair value of share options not expensed during the period | - | (3,000) | |
| (Loss)/profit attributable to the shareholders of the Company used in calculating diluted earnings per share | (56,918) | 2,090,402 | |
| No. of shares | No. of shares | |
| Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share | 103,708,120 | 52,561,113 |
| Adjustments for calculating of diluted earnings per share: | ||
| Share options | 1,094,178 | 687,786 |
| Convertible loan notes | 4,044,477 | 4,032,549 |
| Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share | 108,846,775 | 57,281,448 |
| Share options The share options have been included in the determination of the comparative diluted earnings per share to the extent to which they are dilutive. The share options granted prior to 30 June 2018 did not have an impact on diluted earnings per share as the option price was above the average share price. The 1,500,000 options granted in April 2019 will not be included in the calculation of diluted earnings per share because they are antidilutive as at 30 June 2019. These potentially dilute earnings per share in the future as these may not be exercised before their expiration date. No share options were issued during the year ended 30 June 2020. Convertible loan notes Conversion options over convertible loan notes are considered to be potential ordinary shares and have been included in the determination of comparative diluted earnings per share from their date of issue. Interest accrued on the convertible loan notes, which may be converted to ordinary shares, is also considered to be dilutive and is included in the comparative diluted earnings per share. |
| 2020 | 2019 | ||
| £ | £ | ||
| At 1 July | 33,333 | - | |
| Acquisition | - | 100,000 | |
| Impairment | (33,333) | (66,667) | |
| At 30 June | - | 33,333 |
| NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 6. INTANGIBLE ASSETS (continued) The Company acquired Net Profit Interest licences ("NPI") in three offshore UK blocks for £100,000. The NPI licences allow the Company to benefit from near term exploration and appraisal drilling targets, with independent prospect risks, if such exploration and drilling is successful. The NPI licences require no additional investment from the Company. The licences are initially recorded in the books of the Company at cost. An impairment test is performed on an annual basis by the Directors and they are subsequently measured at cost less any adjustments for impairment losses. All of the licences were deemed to be fully impaired by the Directors, as the underlying operating licences had been relinquished by the company granting each NPI licence at the date of this report. 7. FINANCE COSTS The Company has issued 10% convertible loan notes as set out in note 11. Interest is payable to each of the relevant Noteholders on the principal amount of the Loan Note for the time being outstanding at a rate calculated in accordance with the Instrument. The interest payable at 10% per annum on the Loan Notes held by any Noteholder can be converted into a corresponding number of new fully paid Ordinary Shares at the Noteholder Conversion Price when certain conditions within the Instrument are met. To date £1.2 million of the principal has been repaid early leaving a residual balance of £400,000 advanced at 30 June 2020. The interest charge through the statement of comprehensive income during the year was £54,575 (2019: £79,987). 8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued) On 30 June 2020, the fair value of the Company's holding of 1,500,000 (2019: 1,500,000) ordinary fully paid shares in Eco Atlantic, representing 0.81% (2019: 0.94%) of the issued share capital of the company, was £359,250 (2019: £1,050,000) (23.95p per share (2019: 70.00p per share)). No shares were disposed of in the current year (2019: 1,625,000). On 30 June 2020, the fair value of the Company's holding of 1,200,000 (2019: 1,200,000) ordinary fully paid shares in Ratio, representing 0.70% (2019: 0.70%) of the issued share capital of the company, was £643,446 (2019: £1,013,876) (53.62p per share (2019: 84.49p per share)). No shares were disposed of in the current year (2019: 18,381). During the year the Company purchased 389,653 warrants in Ratio for £209,489 (53.76p per warrant). On 30 June 2020, the fair value of the Company's holding of 389,653 warrants in Ratio, representing 0.68% of the issued warrants of the company was £108,373 (27.81p per warrant). During the year the Company purchased 313,500 ordinary fully paid shares in Cataleya for £2,574,321 (£8.21 per share). On 30 June 2020, the Directors' estimate of the fair value of the Company's holding of 567,185 (2019: 253,685) shares in Cataleya was £4,590,523 (2019: £1,993,317) (£8.09 per share (2019: £7.86)). During the year the Company purchased 1,350,000 (2019: 2,053,770) ordinary fully paid shares in JHI for £2,348,879 (2019: £1,908,369) (£1.74 per share (2019 :£0.93 per share)) which includes a share issue by the Company of 15,930,000 (2019: 7,145,505) new nil par value ordinary shares as part consideration for JHI shares received during the year (see note 13). On 30 June 2020, the Directors' estimate of the fair value of the Company's holding of 100,000 units (each unit comprising one common share plus one half of one common share purchase warrant) plus 3,463,770 shares (2019: 100,000 units plus 2,113,770 shares) in JHI was £6,353,344 (2019: £2,662,304) £1.78 per share (2019: £1.20 per share). No shares were disposed of in the current or prior year. 9. OTHER RECEIVABLES AND PREPAYMENTS
The Company issued £1,600,000 10% convertible loan notes on 24 October 2018. The notes are convertible into ordinary shares of the Company, at the option of the holder, or repayable on 31 March 2021. The conversion price is the higher of £0.08 per share or a 25% discount on the volume weighted average price ("VWAP") 5 days prior to the repayment date. Interest accrued up to and payable on 31 October 2019 may be converted into shares, at the option of the Company, at a conversion price of a 10% discount of VWAP 5 days prior to the payment date. Interest accrued up to and payable on 31 October 2020 may be converted into shares, at the option of the holder, at a conversion price of the higher of £0.08 per share or a 25% discount of VWAP 5 days prior to the payment date. On 31 October 2019 both the 1st interest payment due (£67,447) and the early repayment of £260,000 principal of the residual £660,000 of 10% p.a. convertible unsecured loan notes was made. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued) On 18 March 2019 the Company repaid £940,000 of the principal of the convertible loan notes, the interest accrued on the repaid portion of the convertible loan note was waived by the holder.
FOR THE YEAR ENDED 30 JUNE 2020 11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued) The initial fair value of the derivative portion of the convertible loan notes was determined by the potential loss on ordinary shares if converted on the date the convertible loan notes were issued. The derivative financial instruments are recognised as a financial liability measured at fair value through profit or loss. The remainder of the proceeds is allocated to the liability which is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of the convertible loan notes. 12. TRADE AND OTHER PAYABLES
On 31 October 2019 the Company issued 2,193,210 new nil par value ordinary shares for a total of £327,447 to make both the 1st interest payment due (£67,447) and the early repayment of £260,000 principal of the residual £660,000 of 10% p.a. convertible unsecured loan notes On 27 May 2020, in accordance with the terms of the JHI share purchase agreements, the Company issued a total of 15,930,000 new nil par value ordinary shares for 1,350,000 JHI shares. The total valuation of the Company's share issue was £2,348,879. There were no share redemptions during the year ended 30 June 2020 (2019: £Nil). 14. SHARE-BASED PAYMENT RESERVE
FOR THE YEAR ENDED 30 JUNE 2020 14. SHARE-BASED PAYMENT RESERVE (Continued) No options have been issued and none have vested in the year ended 30 June 2020. The options issued on 3 January 2017 were extended on 1 November 2019 with a new expiry date of 31 December 2021. As no new share options have been issued in the year there are no additional assumptions. The following assumptions were used to determine the fair value of the options for 2019 and 2020:
The number and weighted average exercise price of share options are as follows:
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| 15. FINANCIAL RISK The Company's investment activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. a) Market risk i) Foreign exchange risk The Company's functional and presentation currency is sterling. The Company is exposed to currency risk through its investments in Cataleya, JHI and Ratio. The directors have not hedged this exposure. Currency exposure as at 30 June:
FOR THE YEAR ENDED 30 JUNE 2020 15. FINANCIAL RISK (continued) If the value of sterling had strengthened by 5% against all of the currencies, with all other variables held constant at the reporting date, the equity attributable to equity holders and the profit for the period would have decreased by £635,649 (2019: £283,475). The weakening of sterling by 5% would have an equal but opposite effect. The calculations are based on the foreign currency denominated financial assets as at year end and are not representative of the period as a whole. ii) Price risk Price risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate due to changes in market prices. The Company is exposed to price risk on the investments held by the Company and classified by the Company on the Statement of Financial Position as at fair value through profit or loss. To manage its price risk, management closely monitor the activities of the underlying investments. The Company's exposure to price risk is as follows:
A 30% increase in the market price of JHI and Cataleya would increase the pre-tax profit for the year and the net assets attributable to ordinary shareholders by £3,283,160 (2019: £1,396,686). A 30% reduction in market price would have decreased the pre-tax profit for the year and reduced the net assets attributable to shareholders by an equal but opposite amount. 30% represents management's assessment of a reasonably possible change in the market price of JHI and Cataleya based on the price of share purchases over the last two years. iii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk as the interest rate on borrowings is fixed and the Company's cash deposits do not currently earn interest. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b) Credit Risk | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet commitments it has entered into with the Company. The Directors do not believe the Company is subject to any significant credit risk exposure regarding trade receivables. At the end of the reporting period, the Company's financial assets exposed to credit risk amounted to the following:
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| NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 15. FINANCIAL RISK (continued) c) Liquidity Risk Liquidity risk is the risk that the Company cannot meet its liabilities as they fall due. The Company's primary source of liquidity consists of cash and cash equivalents and those financial assets which are publicly traded and held at fair value through profit or loss and which are deemed highly liquid. The following table details the contractual, undiscounted cash flows of the Company's financial liabilities As at 30 June 2020
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| Capital Management The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern in order to provide optimum returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce cost of capital. In order to maintain or adjust the capital structure, the Company may issue new shares, return capital to shareholders or sell assets. The Company does not have any debt nor is the Company subject to any external capital requirements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Estimation The Company has classified its financial assets as fair value through profit or loss and fair value is determined via one of the following categories: Level I - An unadjusted quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. As required by IFRS 7, the Company will not adjust the quoted price for these investments, (even in situations where it holds a large position and a sale could reasonably impact the quoted price). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Estimation(continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Level II - Inputs are other than unadjusted quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies (see note 11). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Level III - Inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 15. FINANCIAL RISK (continued) The following table shows the classification of the Company's financial assets and liabilities:
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| The Company has classified quoted investments as Level I, derivative financial instruments as Level II and unquoted investments as Level III. The Level III investment is at an early stage of development and therefore has been valued based on the recent price of the investment. The Directors have considered market expectations of future performance of the entity's industry sector, in particular known interest in the area of current exploration. As such, the Directors consider that the recent price of the investment in Cataleya and JHI fairly reflects the value of the investments as at 30 June 2020. A reconciliation of the movements in Level III investments is shown below:
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16. DIRECTORS' REMUNERATION AND SHARE OPTIONS
During the year the Company increased Directors fees payable to D R King from £15,000 p.a. to £20,000 p.a. and agreed to pay Directors fees of £20,000 p.a. each to T O'Gorman and G Walsh. D Corcoran continues to be paid on a consultancy fee basis. During the year consultancy fees of £21,551 (2019: £12,185) were paid to D Corcoran. Nil share options were issued during the year ended 30 June 2020 (2019: 1,500,000) and nil (2019: nil) options were exercised during the year. The 1,500,000 options issued during the year ended 30 June 2019 are due to expire on 31 March 2024. The expiry date for remaining 2,250,000 outstanding options, issued during the years ended 30 June 2017 and 30 June 2018 is 31 December 2021, with the term having been extended in November 2019. The shares held by the Directors are declared in the Directors' report. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 16. DIRECTORS' REMUNERATION AND SHARE OPTIONS (continued) The Company does not employ any staff except for its Board of Directors. The Company does not contribute to the pensions or any other long-term incentive schemes on behalf of its Directors. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17. RELATED PARTIES Fees paid to the Directors are disclosed in note 16. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gerard Walsh, a director of the Company, subscribed for £500,000 of the convertible loan notes issued on 24 October 2018. The total loan payable to Gerard Walsh as at 30 June 2020 was £392,718 (2019: £491,925) which includes £30,067 (2019: £34,110) of accrued interest and the fair value of the conversion rights attributable to Mr Walsh is £133,333 (2019: £170,457). Details of the convertible loan notes are disclosed in note 11. On 31 October 2019 £100,000 of the principal, and £51,096 of the interest, payable to Mr Walsh under the terms of the Convertible Loan Notes was converted into 1,012,027 nil par value shares of the Company. Mr Walsh subscribed £292,050 for 2,246,538 nil par value shares as part of the share placing that occurred on 27 August 2019. Canaccord Genuity as a significant shareholder of the Company is considered a related party under AIM rules. Canaccord Genuity subscribed £1,356,000 for 10,430,769 nil par value shares as part of the share placing that occurred on 27 August 2019. On 31 October 2019 £60,000 of the principal, and £6,131 of the interest, payable to Canaccord Genuity under the terms of the Convertible Loan Notes was converted into 442,944 nil par value shares of the Company. At year end Canaccord Genuity held 28,468,640 Nil Par Value shares in the Company. As detailed in Note 19 - Subsequent Events (below) the Company announced a grant of 750,000 options over nil par value ordinary shares to Dermot Corcoran after the year end. The shares held by the Directors are declared in the Directors' report. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18. CONTROLLING PARTY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In the opinion of the Directors, the Company does not have a controlling party. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19. SUBSEQUENT EVENTS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant of Options On 6 August 2020 the Company announced a grant of 750,000 options over nil par value ordinary shares to Dermot Corcoran. The Exercise Price was 17.0 pence per share and the Expiration Date is 31 July 2023. Following this grant Dermot Corcoran's beneficial interests in Share Options was 1,750,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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