REG - Westmount Energy Ld - Final Results & Notice of AGM

Westmount EnergyAnnouncement

24/10/2018 07:05

RNS Number : 9592E
Westmount Energy Limited
24 October 2018
 


24 October 2018
 
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 2018, 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 at 10.00 a.m. on 10 December 2018.
 
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 on 24 October 2018.
 
2018 Highlights
 
·      Focus on emerging Guyana-Suriname Basin where opportunities remain
 
·      Operating profit of £561,080 for the year to 30 June 2018
 
·      £471,922 raised during the year from existing shareholders by way of exercises of warrants for 7.5p per share
 
·      Strategic investment in Eco (Atlantic) Oil & Gas Limited continues to show strong performance
 
·      New investments in Ratio Petroleum and JHI Associates increase exposure to offshore Guyana
 
·      Post year end acquisition of Net Profits Interests in three Offshore UK Petroleum Licences  
·      Continued focus on evaluation of exploration and production opportunities with potential for a substantial transaction
 
 
Chairman's Statement
The year under review was a successful one for your Company with a strong financial performance resulting from our strategy of increased exposure to the offshore Guyana-Suriname Basin.
 
The financial results show an operating profit of £561,080 for the year.  As reported at the time of the Company's interim results, the main driver of the operating profit was the strong share price performance of your Company's strategic investment in Eco (Atlantic) Oil & Gas Ltd. ('EOG'). The EOG investment has almost trebled in value since our investment in February 2017 while the Company's holding in Ratio Petroleum Energy Limited Partnership ('Ratio Petroleum') which was acquired during the year has also more than doubled in value. Both these investments continue to perform well and provide Westmount's shareholders with exposure to offshore exploration activity in Guyana. The total gross profit on our financial assets amounted to £722,333 for the year, while the corporate administrative expenses for the year were reduced by approximately 20% to £150,166.
 
In conjunction with the funding raised from shareholders, the Directors have continued to exercise strict cost controls, given the Company's low market capitalisation and level of cash resources and mixed investment sentiment in the sector. As in previous years, those Directors who are major shareholders, did not receive a salary for their time or services. This continues to be the case and Directors' remuneration will be kept under review as the Company moves forward.
 
The year under review has been a year of continued improvement and rising optimism for the sector with a sustained Brent oil price above $60/bbl from the beginning of 2018. In addition, the Company's focus on investing to gain exposure to the emerging Guyana-Suriname oil province has proven to be the key driver of the recent financial performance, with the investment prospects having continued to improve following Westmount's first engagement with the region in 2016.
 
Since the initial Liza-1 discovery well in May 2015 and successful appraisal in 2016, ExxonMobil (and partners CNOOC & Hess) has continued with an aggressive exploration program, with nine very large oil discoveries to date (Liza, Payara, Snoek, Liza Deep, Turbot, Ranger, Pacora, Longtail and Hammerhead), with reported discovered resources in excess of 4bn boe and a greater than 80% exploration drilling success rate. Guyana is well on its way to becoming a significant oil producer, with Phase I (120,000 BOPD) Liza Field development drilling underway and first oil expected in March 2020; with planning for Phase II (220,000 BOPD) and Phase III already well advanced.
 
Guyana-Suriname Focused Assets
During the year our largest asset remained the Company's stake in EOG.  
EOG has recently been recognised as a 2018 TSX Venture 50™ company - an annual ranking of top-performing companies on the TSX Venture Exchange (the 'TSX-V') over the last year- achieving a 'top 10' status in the oil and gas sector, one of the five main sectors on the TSX-V.  This accolade reflects, inter alia, the achievement of the Orinduik Farm-in option agreement with Total E&P Activités Pétrolières ("Total"), announced 26 September 2017, which granted Total the option to acquire a 25% Working Interest in the Orinduik Block; and the Strategic Alliance and Share Subscription Agreement with Africa Oil Corporation, announced on 13 November 2017, which raised gross proceeds of CAD 14 million. More recently, on 11 September 2018, EOG issued an AIM CPR and TSX Compliant NI-51-101 Report on the Orinduik License which identified a P50 (Best Estimate) of 2,913 MMBOE Gross Prospective Resources for the block. Two days later Total announced that it was exercising its option early to acquire the 25% working interest in the Orinduik Block for a consideration of USD 12.5 million.
The share price performance of EOG was further enhanced by the announcement in late August 2018 of ExxonMobil's 9th oil discovery (Hammerhead-1), which is reported to be a new play opening discovery (Tertiary) and is located approximately 6 kms from the Orinduik block boundary. EOG and its partners are now expecting to focus on preparations for drilling with block operator Tullow anticipating the spudding of the first well on the Orinduik licence in Q3 2019.
On 1 June 2018 your Company reported that it had built up a circa 1% equity position in Ratio Petroleum.  Ratio Petroleum is an oil and gas exploration company focused on the development and production of international hydrocarbon assets. These assets include a 25% carried interest in the Kaieteur block, offshore Guyana where ExxonMobil as the operator acquired a 5,700 km2 3D seismic survey in 2016. This dataset is currently undergoing processing and interpretation with a view to evaluation of a future drilling program. 
After the accounting year end, your Company announced that it had increased its equity position in JHI Associates Inc. ('JHI'). JHI is a private, Ontario registered, company established in 2014 and focused on oil exploration opportunities in the emerging Guyana-Suriname Basin. JHI's main asset is a 40% carried interest (17.5% carried interest, subject to approval of Total Farm-in transaction announced in February 2018) in the Canje Block covering over 6,000 square kilometres, offshore Guyana. This block is located adjacent to and in the same geologic basin as the ExxonMobil operated Stabroek Block which has delivered nine substantial oil discoveries since 2015, with reported discovered recoverable resources in excess of 4 billion oil-equivalent barrels to date. ExxonMobil, which is also the operator of the Canje block, acquired in excess of 6,100 km2 of 3D seismic on the block in 2016 and this dataset is currently undergoing processing and interpretation with a view to evaluation of a future drilling program.
Combined, these three investments in EOG, Ratio Petroleum and JHI offer Westmount shareholders exposure to potential carried drilling programs across 3 highly prospective blocks, offshore Guyana, where success rates in excess of 80% have been achieved by ExxonMobil to date in the Upper Cretaceous Liza play fairway, indicating low exploration risk.
Other Assets
Post year end, the Company reported that it had acquired Net Profit Interests ("NPI") in three Offshore UK blocks - being a 0.5% NPI in licence P1918 (Colter Prospect), a 0.5% NPI in licence P2222 (Oulton Discovery) and a 1.0% NPI in licence P2235 (Wick Prospect). The Board believe that this investment offers low-cost exposure to near-term exploration and appraisal drilling targets, with independent prospect risks and potential for substantial value uplift, in the success case, without requiring further investment by the Company.
 
The Wick and Colter wells are expected to be drilled in the coming months.
 
This investment is consistent with Westmount's strategy of seeking opportunistic investments with potential for value creation, alongside the Company's current focus on the prolific Guyana-Suriname Basin.
 
In keeping with this strategy, the Company recently disposed of our legacy investments in Rockhopper and Pancontinental Oil & Gas, though we still hold an investment in Argos Resources, which is under review.
 
Outlook
In the short term, the Company will continue to seek to capture value for shareholders within the constraints of an AIM-quoted company with a modest market capitalisation. Our Guyana focused assets provide exposure to three offshore blocks, all offering near term carried or pre-funded drilling opportunities with the potential for transformational value changes in their success cases. We are investigating ways to increase our exposure to these and other opportunities while seeking to moderate the level of short-term dilution for shareholders.
 
In the longer term, the Company continues to seek international investment opportunities with potential for significant value creation, including a transformational transaction that would provide increased exposure to exploration opportunities in the Guyana-Suriname basin. While competition and valuations have increased in this space, we believe that significant opportunities remain and that Westmount presents an opportunity to create a substantial, London-quoted vehicle with exploration exposure to an emerging prolific offshore region.


The Directors wish to thank shareholders for their continued patience and support, and we will update investors on any significant developments at the earliest opportunity.
 
 
 
GERARD WALSH
Chairman
23 October 2018
 
Enquiries: -
 
David King / Jane Vlahopoulou
Westmount Energy Limited                             Tel: 01534 823133
 
Nicholas Wells / Harry Hargreaves
Nomad and Broker
Cenkos Securities plc                                      Tel: 020 7397 8900
 
 
 
 
 
 
 
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
 









































Year ended 30 June 2018






Year ended 30 June 2017




Notes






£






£
























































Net profit / (loss) on financial assets held at fair value through profit or loss










722,333






(8,682)




Administrative expenses


4






(150,166)






(188,818)




Share options expensed


11






(11,087)






(3,000)






























Operating profit / (loss)










561,080






(200,500)
























































Profit / (loss) before and after tax










561,080






(200,500)
























































Total comprehensive profit / (loss) for the year










561,080






(200,500)
























































Basic profit / (loss) per share (pence)


5






1.34






(0.79)






























Diluted profit / (loss) per share (pence)


5






1.34






(0.79)



 























































All results are derived from continuing operations.






























The Company has no items of other comprehensive income.






























 
 























 
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
 



































 
























As at






As at


 
























30 June 2018






30 June 2017


 
















Notes






£






£


 




































 




ASSETS






























 




Non-current assets






























 




    Financial assets at fair value through profit or loss










6






1,727,539






720,591






































Current assets
































    Other receivables










7






8,213






10,778




    Cash










8






557,182






548,042


























































565,395






558,820






































Total assets


















2,292,934






1,279,411






































LIABILITIES AND EQUITY
































Current liabilities
































    Trade and other payables










9






43,170






73,736




 
































EQUITY
































    Stated capital










10






4,244,166






3,772,244




    Share option account










11






363,993






352,906




    Deficit


















(2,358,395)






(2,919,475)






































Total equity


















2,249,764






1,205,675






































Total liabilities and equity


















2,292,934






1,279,411




































 








 








 








 








 




These financial statements were approved and authorised for issue by the Board of Directors on 23 October 2018 and were signed on its behalf by:


 




































 




































 




































 




































 




D R King






























 




































 




Director
 
23 October 2018






























 




































 




































 




































 


















STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
 













































 
Stated


Share option






Total












Note


capital


account


Deficit


equity
















£


£


£


£
































































As at 1 July 2016










2,966,720


349,906


(2,718,975)


597,651


































Comprehensive loss




























Loss for the year ended 30 June 2017










-


-


(200,500)


(200,500)




Transactions with owners




























Subscription and open offer at 5p per nil par value ordinary share






10


805,524


-


-


805,524




Share options expensed






11


-


3,000


-


3,000


































As at 30 June 2017










3,772,244


352,906


(2,919,475)


1,205,675


































Comprehensive profit




























Profit for the year ended 30 June 2018










-


-


561,080


561,080




Transactions with owners




























Warrants converted at 7.5p per nil par value ordinary share






10


471,922


-


-


471,922




Share options expensed






11


-


11,087


-


11,087


































As at 30 June 2018










4,244,166


363,993


(2,358,395)


2,249,764



 
 
 
 
 
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
 









































Year ended 30 June 2018






Year ended 30 June 2017








Notes






£






£






























Cash flows from operating activities


















































Total comprehensive profit / (loss) for the year










561,080






(200,500)




Adjustment for net (profit) / loss on financial assets at fair value through profit or loss










(722,333)






8,682




Adjustment for share options expensed










11,087






3,000




Movement in other receivables










2,565






(755)




Movement in trade and other payables










(30,566)






42,349




Proceeds from sale of investments










-






48,300




Purchase of investments










(284,615)






(561,274)




Net cash used in operating activities










(462,782)






(660,198)






























Cash flows from financing activities


















































Receipt of loan from Director










-






300,000




Repayment of loan from Director










-






(300,000)




Proceeds from issue of ordinary shares


10






471,922






805,524




Net cash generated from financing activities










471,922






805,524






























Net increase in cash and cash equivalents










9,140






145,326
























































Cash and cash equivalents at beginning of year










548,042






402,716






























Cash and cash equivalents at end of year 


8






557,182






548,042

















































































 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
 
 



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 provide seed capital to small companies that are identified as having 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.


 




 
 






































 




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 not yet effective and have not been adopted early by the Company
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Company.
 
Management anticipates that all of the relevant pronouncements will be adopted in the Company's accounting policies for the first period beginning after the effective date of the pronouncement. The new standards and interpretations that have been issued are not expected to have a material impact on the Company's financial statements.
 
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and exercise of judgement by the management while applying the Company's accounting policies in relation to the value of options issued, as set out in note 11. 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 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
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 assets














 




The Company classifies its investments at fair value through profit or loss.


 








 




Financial assets at fair value through profit or loss


 




The Company designates its financial assets as at fair value through profit or loss as the financial assets are managed and their performance is evaluated on a fair value basis. Financial assets carried at fair value through profit or loss are initially recognised at fair value and any transactions costs are recognised in the Statement of Comprehensive Income. Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Company commits to purchase or sell the investment.
 
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.  One investment held at the year-end required valuation using the IPEVC guidelines, JHI Associates Inc, which has been valued based on the price paid to purchase JHI Associates Inc shares from other investors.
 
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all the risks and rewards of ownership. Financial assets at fair value through profit or loss are subsequently carried at fair value. Any gains or losses on derecognition of financial assets is calculated after setting the proceeds against the fair value and, in respect of a part disposal, against the fair value at the date of sale. The surplus or loss on realisation is transferred to the Statement of Comprehensive Income.
 
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' are presented in the Statement of Comprehensive Income in the period in which they arise.


 




 
Financial liabilities
Financial liabilities are trade and other payables with fixed or determinable payment amounts that are not quoted in an active market. They arise when the Company either receives services from another entity or purchases securities, the settlement of which, remains outstanding as at the reporting date. Payables are recognised initially at fair value less transaction costs, if any. These are subsequently measured at amortised cost using the effective interest method. Given the short term nature of payables, (period between their origination and settlement), their amortised cost is considered a reasonable estimate of their fair 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 11. 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











2018






2017


2016












£






£


£






























Administration and consultancy fees






34,094






34,718


34,792




Advisory fees






25,000






38,220


12,500




Audit fees






13,880






12,074


10,851




Directors' fees






12,000






20,000


20,000




Foreign exchange losses






-






7,587


-




Legal and professional fees






6,277






23,700


7,870




Printing and stationary






9,086






14,950


5,031




Registered agent's fees






16,902






17,752


6,744




Other expenses






32,927






19,817


14,823






































150,166






188,818


112,611



 
 
5.          PROFIT / (LOSS) PER SHARE
 
The calculation of basic profit / (loss) per ordinary share is based on the comprehensive profit for the year of £561,080 (2017: £200,500 loss). The weighted average number of shares in issue during the year was 41,760,211 (2017: 25,354,209). As explained in note 11 there are share options in issue over the Company's ordinary shares. The option exercise price is above the average share price during the period, therefore the options do not have any impact on diluted earnings per share.
 


 




 






 




 


 
6.         FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
 







2018






2017








£






£






















Argos Resources Ltd ("Argos")


63,000






30,000




Rockhopper Exploration plc ("Rockhopper")


146,838






80,582




Pancontinental Oil & Gas NL ("Pancontinental")


6,716






1,772




Eco Atlantic Oil & Gas Ltd ("Eco Atlantic")


987,500






531,250




JHI Associates Inc ("JHI")


110,555






76,987




Ratio Petroleum Energy Limited Partnership ("Ratio")


412,930






-






















Total investments


1,727,539






720,591



 
 
On 30 June 2018, the fair value of the Company's holding of 1,000,000 (2017: 1,000,000) ordinary fully paid shares in Argos, representing 0.46% (2017: 0.46%) of the issued share capital of the company, was £63,000 (2017: £30,000) (6.30p per share (2017: 3.00p per share)). No shares were disposed of in the current or prior year.
 
On 30 June 2018, the fair value of the Company's holding of 358,142 (2017: 358,142) ordinary fully paid shares in Rockhopper, representing 0.08% (2017: 0.08%) of the issued share capital of the company, was £146,838 (2017: £80,582) (41.00p per share (2017: 22.50p)). No shares were disposed of in the current or prior year. On 20 September 2018, the Company's entire holding of 358,142 shares in Rockhopper was sold for £129,816.
 
On 30 June 2018, the fair value of the Company's holding of 3,000,000 (2017: 3,000,000) ordinary fully paid shares in Pancontinental, representing 0.06% (2017: 0.06%) of the issued share capital of the company, was £6,716 (2017: £1,772) (0.22p per share (2017: 0.06p per share)). No shares were disposed of in the current or prior year. On 19 September 2018, the Company's entire holding of 3,000,000 shares in Pancontinental was sold for £11,289.
 
On 30 June 2018, the fair value of the Company's holding of 3,125,000 (2017: 3,125,000) ordinary fully paid shares in Eco Atlantic, representing 1.98% (2017: 2.63%) of the issued share capital of the company, was £987,500 (2017: £531,250) (31.60p per share (2017: 17.00p per share)). No shares were disposed of in the current or prior year.
 
On 24 April 2018, the Company purchased 60,000 ordinary fully paid shares in JHI for £39,567 (65.94p per share). On 30 June 2018, 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 60,000 shares (2017: 100,000 units) in JHI was £110,555 (2017: £76,987) (69.10p per share (2017: 76.99p per unit)). No shares were disposed of in the current or prior year.
 
Between 29 January 2018 and 6 February 2018, the Company purchased 600,000 ordinary fully paid shares in Ratio for £118,662 (19.78p per share). Between 30 May 2018 and 1 June 2018, the Company purchased 600,000 ordinary fully paid shares in Ratio for £126,386 (21.06p per share). On 30 June 2018, the fair value of the Company's holding of 1,200,000 ordinary fully paid shares in Ratio, representing 1.05% of the issued share capital of the company, was £412,930 (34.41p per share). No shares were disposed of in the current year.
 
 
7.         OTHER RECEIVABLES







2018






2017








£






£






















Prepayments and accounts receivable


8,213






10,778



 
 
 
 
8.         CASH







2018






2017








£






£






















Cash at bank


303,204






548,042




Cash at broker


253,978






-


























557,182






548,042



 
 
9.         TRADE AND OTHER PAYABLES







2018






2017








£






£






















Accrued expenses


43,170






73,736



 
 
10.        STATED CAPITAL
 



Allotted, called up and fully paid:


Ordinary shares






Ordinary shares








No.






£






















1 July 2016


22,570,335






2,966,720




Additions


18,285,167






805,524






















1 July 2017


40,855,502






3,772,244




Additions


6,292,294






471,922






















At 30 June 2018


47,147,796






4,244,166



 
 
On 18 April 2017, the Company raised further capital in the form of a subscription in conjunction with an open offer. The subscription raised £200,000 before expenses with 4,000,000 ordinary shares issued at 5.00 pence per share. The open offer on 8 May 2017 raised £564,258 before expenses with 11,285,167 ordinary shares issued at 5.00 pence per share. A further subscription on 19 May 2017 raised £150,000 before expenses with 3,000,000 ordinary shares issued at 5.00 pence per share.  In total, additional capital of £914,258 was raised and transaction costs of £108,734 have been deducted from stated capital.
 
Between 26 February 2018 and 31 May 2018, a total of 6,292,294 warrants were exercised at 7.5 pence each, resulting in the issue of 6,292,294 new nil par value ordinary shares with total proceeds of £471,922.  
 
There were no share redemptions during the year ended 30 June 2018 (2017: Nil).
 
 
11.        SHARE OPTION ACCOUNT
 







2018






2017








£






£






















At 1 July


352,906






349,906




Share options expensed


11,087






3,000






















At 30 June


363,993






352,906



 
On 4 January 2018, the Company granted 500,000 share options at a weighted average exercise price of 7.5p per share. The options vested in the current financial year and are exercisable at the option of the option holder, expiring 31 December 2019.  The fair value of the options granted was £5,088 using the Black Scholes valuation model.
 
The following assumptions were used to determine the fair value of the options:







Black Scholes














Weighted average share price at grant date (pence)


6.75




Exercise price (pence)


7.5




Expected volatility (%)


48%




Average option life (years)


2.0




Risk free interest rate (%)


0.713%



 
The expected volatility is based on the historic volatility of the Company's share price.
 
The number and weighted average exercise price of share options are as follows:
 







2018






2018






2017






2017








Weighted average exercise price (p)






 
 
Number of options
 






Weighted average exercise price (p)






 
 
Number of
options




Outstanding at start of the year


7.5






1,750,000






20.0






1,650,000




Granted during the year


7.5






500,000






7.5






1,750,000




Exercised during the year


-






-






-






-




Lapsed during the year


-






-






20.0






(1,650,000)




Outstanding at end of the year


7.5






2,250,000






7.5






1,750,000




Exercisable at end of the year


7.5






2,250,000






7.5






1,750,000



 
 
 
           
 


 




 






 




 


12.        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 Pancontinental, JHI and Ratio. The directors have not hedged this exposure.
 
Currency exposure as at 30 June:















Assets and net exposure
2018






Assets and net exposure
2017
















£






£




Currency
























US Dollars










110,555






76,987




Australian Dollars










6,716






1,772




Israeli Shekel










412,930






-






























Total










530,201






78,759



 
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 £25,250 (2017: £3,750). 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 2018


1,727,539




Fair Value Through Profit or Loss, as at 30 June 2017


720,591



 
With the exception of JHI, the Company's investments are all publicly traded and listed on either the AIM, the Australian Stock Exchange or the Tel Aviv Stock Exchange.  A 30% increase in market price would increase the pre-tax profit for the year and the net assets attributable to ordinary shareholders by £485,095 (2017: £193,081).  A 30% reduction in market price would have decreased the pre-tax profit for the year and reduced the net assets attributable to shareholders by an equal but opposite amount.  30% represents management's assessment of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI would increase the pre-tax profit for the year and the net assets attributable to ordinary shareholders by £33,166 (2017: £23,096).  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 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 it does not have any borrowings and the Company's cash deposits do not currently earn interest.
 


 




 


a)    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:
 







2018






2017








£






£






















Cash and cash equivalents


557,182






548,042



 
 
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 financial assets held at fair value through profit or loss. The Company's financial assets at fair value through profit or loss are primarily publicly traded and are deemed highly liquid.
 
The following table details the contractual, undiscounted cash flows of the Company's financial liabilities:
 
As at 30 June 2018







Up to 3 months


Up to 1 year


Over 1 year


Total








£


£


£


£




Financial liabilities




















Trade and other payables


43,170


-


-


43,170



 
As at 30 June 2017







Up to 3 months


Up to 1 year


Over 1 year


Total








£


£


£


£




Financial liabilities




















Trade and other payables


73,736


-


-


73,736



 
 




 


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). 




 








 


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:
 







Level I


Level II


Level III


Total








£


£


£


£


























At 30 June 2018


1,616,984


-


110,555


1,727,539




At 30 June 2017


643,604


-


76,987


720,591






























 


The level III investment is at an early stage of development and therefore has been valued based on the price paid to purchase JHI shares from other investors. 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 cost of JHI fairly reflects the value of the investments as at 30 June 2018.
 
A reconciliation of the movements in Level III investments is shown below:
 







2018






2017








£






£




At start of the year


76,987






-




Purchases


39,567






61,275




Change in fair value


(5,999)






15,712






















At end of the year


110,555






76,987


























 


13.        DIRECTORS' REMUNERATION AND SHARE OPTIONS
 







2018






2017






2018






2017








Directors' fees
£






Directors' fees
£






Options outstanding
£






Options outstanding
£




D R King


12,000






12,000






250,000






250,000




M Bradlow
(resigned 11 April 2017)


-






8,000






500,000






500,000




D Corcoran


-






-






500,000






-




G Walsh


-






-






500,000






500,000




T O'Gorman


-
 






-
 






500,000






500,000








12,000






20,000






2,250,000






1,750,000



 
At the year end the Company owed £nil (2017: £nil) in outstanding directors' fees.




 


 
500,000 share options were issued during the year ended 30 June 2018 (2017: 1,750,000) and nil (2017: nil) options were exercised during the year. All outstanding options are due to expire 31 December 2019.
 
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.
 
 




 


14.        RELATED PARTIES     




 








 


Fees paid to the Directors are disclosed in note 13.




 








 


 
15.       CONTROLLING PARTY
 




 


            In the opinion of the Directors, the Company does not have a controlling party.
 




 








































 


16.        SUBSEQUENT EVENTS
 




 


On 22 August 2018, G Walsh, a director of the Company, loaned £200,000 to the Company, on an interest free basis.  This is due to be repaid between 23 October 2018 and 31 December 2018.
 
The Company purchased a further 100,000 and 850,000 ordinary fully paid shares in JHI in July and August 2018, respectively.
 
Investments sold since the year end are detailed in Note 6.
 
On 1 October 2018, the Company acquired the Net Profit Interests in three offshore UK petroleum licences previously held by Infrastrata Plc.
 

































 




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END
 
 
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