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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tomco Energy Plc | LSE:TOM | London | Ordinary Share | IM00BZBXMN96 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.0385 | 0.037 | 0.04 | 0.0385 | 0.0385 | 0.0385 | 1,900,063 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Drilling Oil And Gas Wells | 0 | -690k | -0.0002 | -2.00 | 1.27M |
From Apr 2019 to Apr 2024
TIDMTOM
RNS Number : 8943Y
TomCo Energy PLC
04 December 2014
4 December 2014
TomCo Energy plc
("TomCo" or "the Company")
Full year results for the year ended 30 September 2014
TomCo Energy plc (AIM: TOM), the oil shale exploration and development company focused on using innovative technology to unlock unconventional hydrocarbon resources in the United States, is pleased to announce its full year results for the year ended 30 September 2014.
The annual report and accounts are available on the Company's website.
Enquiries:
For further information, please visit www.tomcoenergy.uk.com or contact:
TomCo Energy plc Tel: +44 20 7917 6822 Paul Rankine, CEO / Miikka Haromo, CFO Shore Capital (Nomad & Broker) Tel: +44 20 7408 4090 Nominated Adviser Pascal Keane / Edward Mansfield Corporate Broking Jerry Keen Tavistock Communications (Financial PR & IR) Tel: +44 20 7920 3150 Ed Portman / Jos Simson
Report of the Directors
The Directors submit their report and the financial statements of the Company and of the Group for the year ended 30 September 2014.
Principal activity
The principal activity of the Group is that of developing oil shale leases for future production.
Risk assessment
The Group's oil and gas activities are subject to a range of financial and operational risks which can significantly impact on its performance.
Operational risk
The Group has obtained resource assessments in relation to its oil shale leases, the latest of which shows 126 million barrels of oil in surface mineable JORC Measured Resource.
TomCo has entered into a license with Red Leaf Resources Inc ("Red Leaf"), which developed and owns the patents to the EcoShale(TM) extraction process, to use this unique and environmentally sensitive technology to extract oil from the Group's leases. Having built and tested a pilot plant in 2008 and completed its permitting for the Seep Ridge project, Red Leaf has started construction of a one-off Early Production System ("EPS") capsule, which is 75% of the planned full scale commercial capsules used to produce 9,800 barrels of oil per day (bopd), to demonstrate scalability of the process and economic viability of its Utah projects. The technology produced by Red Leaf is currently unique within the marketplace and until extraction commences, the viability of this technology will not be determinable. Once the viability of this technology has been determined, the Group intends to build and operate a similar EcoShale(TM) plant on its Holliday Block lease in Utah.
Environmental, health and safety and other regulatory standards
The Group's future extraction activities are subject to various federal and state laws and regulations relating to the protection of the environment including the obtaining of appropriate permits and approvals by relevant environmental authorities. Such regulations typically cover a wide variety of matters including, without limitation, prevention of waste, pollution and protection of the environment, labour regulations and worker safety. Furthermore, the future introduction or enactment of new laws, guidelines and regulations could serve to limit or curtail the growth and development of the Group's business or have an otherwise negative impact on its operations. The Group ensures it complies with the relevant laws and regulations in force in the jurisdictions in which it operates.
Liquidity and interest rate risks
The Group is ultimately dependent on sources of equity or debt funding to develop its exploration assets and meet its day to day capital commitments. Cash forecasts identifying the liquidity requirements of the Group are produced frequently. These are reviewed regularly by management and the Board to ensure that sufficient financial headroom exists for at least a twelve month period. This strategy will continually be reviewed in the light of developments with existing projects and new project opportunities as they arise.
Currency risk
Due to the limited income and expenses denominated in foreign currencies, it was not considered cost effective to manage transactional currency exposure on an active basis. However, as the financial statements are reported in sterling, any movements in the exchange rate of foreign currencies against sterling may affect the Group's statements of comprehensive income and financial position. The Group holds some cash in US dollars to mitigate the foreign exchange risk.
Financial instruments
The Group holds an investment in Red Leaf. There is a risk that in the future this investment falls in value and the Group is unable to realise its accounting value. TomCo continues to monitor the progress of Red Leaf and in the event that the value is deemed by the Group to have declined, an impairment will be recognised. No such impairment has occurred to date. Further details can be found in Note 12.
It was not considered an appropriate policy for the Group to enter into any hedging activities or trade in any financial instruments. Further information can be found in Note 20.
Results and dividends
The statement of comprehensive income is set out on page 8. The Directors do not propose the payment of a dividend (2013: GBPNil).
The Group made no charitable or political donations in the year (2013: GBPNil).
Review of the key events during the year
Oil Shale
In January 2014, the Group submitted its Large Mining Operations ("LMO") application to the Utah Division of Oil, Gas and Mining ("DOGM"). The final details required by DOGM were submitted during the reporting period. Post the reporting period, the Group's Notice of Intention to Commence LMO was tentatively approved by DOGM. The approval is another important step in the environmental permitting process and a requirement under Utah State law to take the Group's Holliday Project into commercial production. The tentative permit was subject to 30-day public consultation period which finished on 20 November 2014. DOGM is currently reviewing the comments received.
In February 2014, the Group submitted its Ground Water Discharge Permit ("GWDP") application to the Utah Division of Water Quality ("DWQ"). DWQ indicated that it required additional information on 14 points, of which two required some additional work. TomCo is in the process of submitting these outstanding details to DWQ, so DWQ will be in a position to consider making a decision to tentatively approve TomCo's GWDP and request a public comment period.
TomCo's technology suppliers, Red Leaf, are progressing well in their move into the full construction phase of their EPS capsule on their licence area 15 miles west of TomCo's Holliday Block. The Board believes that Red Leaf intends to begin the EPS capsule heating in late 2015 and produce approximately 350,000 barrels of oil in 2016. Under the licence agreement entered into between Red Leaf and TomCo in March 2010 the Group will be able to leverage off Red Leaf's implementation experience from construction of their EPS capsule. If the Group progresses its Holliday Block project to the development phase further funding would be required.
Financing
In September 2014, the Group appointed Shore Capital and Corporate Limited as Nominated Adviser and Shore Capital Stockbrokers Limited as sole broker and raised gross proceeds of GBP1.0 million (before expenses) through the conditional placing (the "Placing") of 200,000,000 new ordinary shares of 0.5p in the capital of the Company with new and existing investors at 0.5 pence per Placing Share. The Placing completed in full on 2 October 2014 and all proceeds were received in October. The net proceeds of the Placing will be used to complete the permitting process at the Group's Holliday Block, Utah in the United States and for working capital purposes.
While dilution of existing shareholders is a concern and issuing equity is not a decision the Board takes lightly, the Board believes that ensuring the Group is fully funded through the permitting process and beyond is vital and we look towards a potentially transformational period for the Group. TomCo has a strengthened balance sheet as we look to move our asset forward towards development.
Directors
Directors who served on the Board during the year to 30 September 2014 were as follows:
Sir Nicholas Bonsor
Paul Rankine
Miikka Haromo
Directors' interests in the shares of the Group, including family interests, were as follows:
Hot Features
Premium
30 September 2014 30 September 2013
--------------------- ---------------------
Ordinary Ordinary
0.5 pence Share 0.5 pence Share
shares warrants shares warrants
----------- ---------- --------- ---------- ---------
N Bonsor 1,550,011 - - -
M Haromo* 3,000,000 - - -
P Rankine 5,000,000 - 1,295,301 -
----------- ---------- --------- ---------- ---------
9,550,011 - 1,295,301 -
----------- ---------- --------- ---------- ---------
Details of share warrants can be found in Note 19.
* Miikka Haromo has an option to acquire 15 million Ordinary Shares from Kenglo One Limited at a price of 3p per Ordinary Share. The option period commenced on 21 July 2012 and ends on 31 December 2014.
Payments of payables
The Group's policy is to negotiate payment terms with its suppliers in all sectors to ensure that they know the terms on which payment will take place when the business is agreed and to abide by those terms of payment.
The Group's payment days as at 30 September 2014 for trade payables was 8 days (2013: 11 days).
Going concern
The Directors have prepared cash flow forecasts which show that the Group has sufficient funds to meet its working capital requirements and known commitments for a period of twelve months from the date of signing of these financial statements. The Group's working capital and commitments are closely monitored by the directors and monthly forecasts are prepared in order to ensure that the Group has cash available to meet known project and overhead commitments. There are no contractual commitments for minimum development spend within any of the Group's licences and therefore the pace of development of the asset can be adjusted within the availability of cash resources. Should expenditures arise which are not included within the directors' forecasts, the Group will require further funding, or existing contractual working capital commitments will need to be deferred. As a result of the review performed by the directors, the monitoring of the cash position and the availability of forecast cash at the end of the twelve month period from the date of signing the financial statements, the Directors have confirmed that it is appropriate for the financial statements to be prepared on the going concern basis.
Insurance of key management
The Group maintains Directors' and officers' liability insurance cover for TomCo Energy plc's Directors in respect of their duties as Directors.
Directors' responsibilities
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 Group and enable them to ensure that the financial statements comply with the requirements of the Isle of Man Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and for taking steps for the prevention and detection of fraud and other irregularities.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that year. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. In preparing these financial statements, the directors are required to:
-- consistently select and apply appropriate accounting policies;
-- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and
-- provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
-- state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements.
The Directors confirm that they have complied with these requirements, and, having a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing the financial statements.
Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.
The external auditors are required to rotate the Senior Statutory Auditor responsible for the company audits every five years. In certain circumstances, it is permissible to extend that tenure by up to two years. The Board believes that due to significant strategic changes the Group has undergone over the last 18 months and the developments anticipated by the Group merits having a continuity of the Senior Statutory Auditor that this extension provides.
BDO LLP and the Company have agreed to extend the term of the Senior Statutory Auditor for a seventh year in line with the guidance as to how long a responsible individual may remain the Senior Statutory Auditor for a client as set out in Ethical Standard 3 'Long Association with the Audit Engagement' issued by the Audit Practices Board. There are specific provisions relating to the extension of tenure for listed companies with which the Company complies.
BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.
By order of the Board
Sir Nicholas Bonsor
Non-Executive Chairman
4 December 2014
Independent auditors' report
to the members of TomCo Energy plc
We have audited the financial statements of TomCo Energy plc for the year ended 30 September 2014 which comprise the consolidated statement of comprehensive income, the consolidated and company statement of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable Isle of Man company law and International Financial Reporting Standards as adopted by the European Union (IFRS).
This report is made solely to the Company's members as a body, in accordance with Section 80C of the Isle of Man Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, and the Company's members as a body for our audit work, for this report, or for the opinion we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable Isle of Man company law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of, in all material respects the state of the Group and the Company's affairs as at 30 September 2014 and of the Group's loss for the year then ended; and
-- have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
BDO LLP
Chartered Accountants
London
United Kingdom
4 December 2014
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Consolidated statement of comprehensive income
for the financial year ended 30 September 2014
2014 2013
Note GBP'000 GBP'000
--------------------------------------- ----- -------- --------
Revenue 2 15 11
Cost of sales 2 (4) (4)
--------------------------------------- ----- -------- --------
Gross profit 11 7
Administrative expenses (741) (872)
--------------------------------------- ----- -------- --------
Operating loss 5 (730) (865)
Finance income 3 - 1
Finance costs 4 (2) (1)
--------------------------------------- ----- -------- --------
Loss on ordinary activities
before taxation (732) (865)
Taxation 6 - -
--------------------------------------- ----- -------- --------
Loss for the year attributable
to equity shareholders of the
parent (732) (865)
--------------------------------------- ----- -------- --------
Total comprehensive loss attributable
to equity shareholders of the
parent (732) (865)
--------------------------------------- ----- -------- --------
2014 2013
Pence Pence
Loss per share attributable per share per share
to the equity shareholders of
the parent
-------------------------------- ---------- ----------
Basic & diluted loss per share 8 (0.04) (0.05)
-------------------------------- ---------- ----------
The Company has elected to take exemption under the Companies Act not to present the parent company's statement of comprehensive income. The loss for the parent company for the year was GBP749,467 (2013: GBP863,153).
The notes form part of these financial statements.
Consolidated and Company Statement of Financial Position
as at 30 September 2014
Group Company Group Company
2014 2014 2013 2013
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----- --------- --------- --------- ---------
Assets
Non--current assets
Intangible assets 9 8,815 1,314 8,421 1,314
Property, plant and 10 - - - -
equipment
Investment in subsidiaries 11 - 7,501 - 7,107
Available for sale
financial assets 12 3,262 3,262 3,262 3,262
Other receivables 13 - - - 137
----------------------------- ----- --------- --------- --------- ---------
12,077 12,077 11,683 11,820
----------------------------- ----- --------- --------- --------- ---------
Current assets
Trade and other receivables 13 1,063 1,034 63 34
Cash and cash equivalents 14 90 89 1,236 933
----------------------------- ----- --------- --------- --------- ---------
1,153 1,123 1,299 967
----------------------------- ----- --------- --------- --------- ---------
TOTAL ASSETS 13,230 13,200 12,982 12,787
Liabilities
Current liabilities
Trade and other payables 15 (222) (222) (221) (34)
(222) (222) (221) (34)
----------------------------- ----- --------- --------- --------- ---------
Net current assets 931 901 1,078 933
----------------------------- ----- --------- --------- --------- ---------
Non-current liabilities
Other liabilities 15 - - - (5)
----------------------------- ----- --------- --------- --------- ---------
TOTAL LIABILITIES (222) (222) (221) (39)
----------------------------- ----- --------- --------- --------- ---------
Total net assets 13,008 12,978 12,761 12,748
----------------------------- ----- --------- --------- --------- ---------
Shareholders' equity
Share capital 17 9,931 9,931 8,894 8,894
Share premium 18 14,578 14,578 14,636 14,636
Warrant reserve 19 42 42 42 42
Retained deficit (11,543) (11,573) (10,811) (10,824)
----------------------------- ----- --------- --------- --------- ---------
Total equity 13,008 12,978 12,761 12,748
----------------------------- ----- --------- --------- --------- ---------
The accounts were approved and authorised for issue by the Board of Directors on 4 December 2014.
Paul Rankine Miikka Haromo Director Director
Consolidated statement of changes in equity
for the financial year ended 30 September 2014
Group Company
Share Share Warrant Retained Share Share Warrant Retained
capital premium reserve Deficit Total capital premium reserve deficit Total
Note
--------------- ------ -------- -------- -------- --------- -------- -------- -------- -------- --------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ -------- -------- -------- --------- -------- -------- -------- -------- --------- --------
Balance at 1
October
2012 8,105 13,629 361 (10,307) 11,788 8,105 13,629 361 (10,322) 11,773
--------------- ------ -------- -------- -------- --------- -------- -------- -------- -------- --------- --------
Total
comprehensive
loss for the
year - - - (865) (865) - - - (863) (863)
Issue of
warrants 19 - (42) 42 - - - (42) 42 - -
Expired
warrants 17,18 - - (361) 361 - - - (361) 361 -
Issue of share
capital 17,18 789 1,049 - - 1,838 789 1,049 - - 1,838
Balance at 30
September
2013 8,894 14,636 42 (10,811) 12,761 8,894 14,636 42 (10,824) 12,748
--------------- ------ -------- -------- -------- --------- -------- -------- -------- -------- --------- --------
Total
comprehensive
loss for the
year - - - (732) (732) - - - (749) (749)
Issue of share
capital 17,18 1,037 (58) - - 979 1,037 (58) - - 979
At 30
September
2014 9,931 14,578 42 (11,543) 13,008 9,931 14,578 42 (11,573) 12,978
--------------- ------ -------- -------- -------- --------- -------- -------- -------- -------- --------- --------
The following describes the nature and purpose of each reserve within owners' equity:
Reserve Descriptions and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium Amount subscribed for share capital in excess of nominal
value.
Warrant reserve Amounts credited to equity in respect of warrants to acquire
ordinary shares in the Company.
Retained deficit Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income.
The notes form part of these financial statements.
Consolidated and company statements of cash flows
for the financial year ended 30 September 2014
Note Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------ -------- -------- -------- --------
Cash flows from operating
activities
Loss after tax 2 (732) (749) (865) (863)
Depreciation 10 - - 9 9
Finance income 3 - - (1) (1)
Finance costs 4 2 2 1 1
(Increase)/decrease in trade
and other receivables 13 - - (11) (306)
Increase/(decrease) in trade
and other payables 15 114 138 (7) (2)
----------------------------------- ------ -------- -------- -------- --------
Cash used in operations (615) (609) (874) (1,162)
----------------------------------- ------ -------- -------- -------- --------
Cash flows from investing
activities
Investment in oil & gas assets 9 (581) - (139)
Additions to investment in
subsidiary 11 - (285) - (139)
Net cash used in investing
activities (581) (285) (139) (139)
----------------------------------- ------ -------- -------- -------- --------
Cash flows from financing
activities
Issue of share capital (net
of issue costs) 17,18 50 50 1,838 1,838
----------------------------------- ------ -------- -------- -------- --------
Net cash generated from financing
activities 50 50 1,838 1,838
----------------------------------- ------ -------- -------- -------- --------
Net increase/(decrease) in
cash and cash equivalents (1,146) (844) 825 537
Cash and cash equivalents
at beginning of financial
year 1,236 933 411 396
----------------------------------- ------ -------- -------- -------- --------
Cash and cash equivalents
at end of financial year 90 89 1,236 933
----------------------------------- ------ -------- -------- -------- --------
The notes form part of these financial statements.
Notes to the financial statements
for the financial year ended 30 September 2014
1. Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
1.1 Basis of preparation
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations and with those parts of the Isle of Man Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historic cost convention modified by the revaluation of certain financial instruments to fair value including derivatives and available for sale financial assets.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reporting amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Details of the Group's significant accounting judgments and critical accounting estimates are set out in these financial statements and include:
- Commercial reserves estimates; (Note 9);
- Impairment of intangible assets (Note 9);
- Impairment of available for sale financial assets (Note 12);
- Share based payments (Note 19);
The Group has consistently applied all applicable accounting standards.
The Directors have prepared cash flow forecasts which show that the Group has sufficient funds to meet its working capital requirements and known commitments for a period of twelve months from the date of signing of these financial statements. The Group's working capital and commitments are closely monitored by the directors and monthly forecasts are prepared in order to ensure that the Group has funds available to meet known project and overhead commitments. There are no contractual commitments for minimum development spend within any of the Group's licences and therefore the pace of development of the asset can be adjusted within the availability of cash resources. Should expenditures arise which are not included within the directors' forecasts, the Group will require further funding, or existing contractual working capital commitments will need to be deferred. As a result of the review performed by the directors, the monitoring of the cash position and the availability of forecast cash at the end of the twelve month period from the date of signing the financial statements, the directors have confirmed that it is appropriate for the financial statements to be prepared on the going concern basis.
1.2 Future changes in accounting standards
The IFRS financial information has been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period.
There were no new standards, interpretations and amendments to published standards effective in the year which had a significant impact on the Group.
Standards, Interpretations and amendments, which are effective for future reporting periods:
International Accounting Standards Effective
(IAS/IFRS) date
(periods beginning
on or after)
-- IFRS 10 Consolidated Financial Statements 1 Jan 2014
-- IFRS 11 Joint Arrangements 1 Jan 2014
-- IFRS 12 Disclosure of Interests in Other 1 Jan 2014
Entities
-- IAS 32 Offsetting Financial Assets and 1 Jan 2014
Financial Liabilities
-- IAS 27 Separate Financial Statements 1 Jan 2014
-- IAS 28 Investments in Associates and 1 Jan 2014
Joint Ventures
-- IAS 36 Recoverable amounts disclosures 1 Jan 2014
for non financial assets
-- IFRS 9 Financial instruments 1 Jan 2018
-- IFRS 15* Revenue from contracts with customers 1 Jan 2017
These standards are not expected to have a material impact on future financial statements.
Standards marked * are still to be endorsed by the European Union.
1.3 Basis of consolidation
The Group accounts consolidate the accounts of the parent company, TomCo Energy plc, and all its subsidiary undertakings drawn up to 30 September 2014. All intra--group transactions, balances, income and expenses are eliminated on consolidation.
The acquisition of subsidiaries is accounted for on the purchase basis. A subsidiary is consolidated where the Company has the power, either directly or indirectly, to govern the financial and operating activities of another entity or business, so it is able to obtain benefits from its activities. On acquisition all the subsidiary's assets and liabilities which existed at the date of acquisition are recorded at their fair values reflecting their condition at the time. If, after re--assessment, the Group's interest in the net fair value of the identifiable assets liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the statement of comprehensive income.
1.4 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, and the Finance Director.
Based on an analysis of risks and returns, the Directors consider that the Group has one principal business segment based on geographical location. The Group's revenue arises within the US. The profit / (loss) before taxation arises within the UK and US. Net assets are in the UK and the US.
1.5 Revenue
Turnover represents the Group's share of sales of oil during the year, excluding sales tax and royalties. Income arises from the US and is recognised when the oil is delivered to the customer.
1.6 Finance income
Finance income is accounted for on an effective interest basis.
1.7 Property, plant and equipment
Office fixtures, fittings and equipment are stated at cost of purchase. Depreciation of office fixtures, fittings and equipment is provided at 33.3% straight line per annum on cost.
Oil & Gas development and production assets are accumulated on a field-by-field basis and represent the cost of developing the commercial reserves discovered and bringing them into production, together with any decommissioning asset. They are presented as oil properties in Note 10.
The net book values of producing assets are depreciated on a field-by-field basis using the unit of production method by reference to the ratio of production in the period to the related commercial reserves of the field, taking into account estimated future development expenditures necessary to bring those reserves into production.
The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. Impairments are charged to administrative expenses within the statement of comprehensive income.
1.8 Intangible assets
The Company applies the full cost based method of accounting for oil and gas operations. For evaluation properties, all lease and licence acquisition costs, geological and geophysical costs and other direct costs of exploration appraisal and development are capitalised as intangible fixed assets in appropriate cost pools. Costs relating to unevaluated properties are held outside the relevant cost pool, and are not amortised until such time as the related property has been fully appraised. When a cost pool reaches an evaluated and bankable feasibility stage, the assets are transferred from intangible to oil properties within property, plant and equipment.
Depreciation is not charged on the technology licences as the technology is not yet available for use. The technology produced by Red Leaf is currently unique within the marketplace and until extraction commences, the full scale viability of this technology will not be determinable.
1.9 Impairment
An impairment test on intangible oil & gas assets is performed whenever events and circumstances arising during the exploration and evaluation phase indicate that the carrying value of the asset may exceed its recoverable amount. The cash generating unit applied for impairment test purposes is generally the field, except that a number of field interests may be grouped as a single cash generating unit where the cash flows are interdependent.
The carrying amounts of the Group's assets, other than oil & gas assets (described above), are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement.
1.10 Asset disposals
Proceeds from the disposal of an asset, or part thereof, are taken to the statement of comprehensive income together with the requisite net book value of the asset, or part thereof, being sold.
1.11 Taxation
Taxation expense represents the sum of current tax and deferred tax.
Current tax is based on taxable profits for the financial period using tax rates that have been enacted or substantively enacted by the reporting date. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. If deferred tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss, it is not accounted for. Deferred tax is determined using tax rates that have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversals of the temporary differences is controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
1.12 Foreign currencies
The accounts have been prepared in pounds sterling being the presentational currency of the Group and Company. The functional currency of the holding Company and the Company's subsidiaries is also pounds sterling. Assets and liabilities held in the Company or overseas subsidiaries in US dollars are translated into pounds sterling at the rate of exchange ruling at the reporting date.
Transactions entered into by Group entities in a currency other than the functional currency of the entity are recorded at the rates ruling when the transactions occur. Exchange differences arising from the settlement of monetary items are included in the statement of comprehensive income for that period.
1.13 Operating leases
Rentals payable under operating leases, net of lease incentives, are charged to the statement of comprehensive income on a straight--line basis over the period of the lease.
1.14 Available--for--sale financial assets
The Group classifies its investments as available--for--sale financial assets.
The fair value of available for sale financial assets are carried at fair value when the fair value can be measured reliably with changes in fair value recognised directly in equity within the available-for-sale reserve; exchange differences on available-for-sale financial assets denominated in a foreign currency are recognised in other comprehensive income. If the fair value of available for sale financial assets cannot be reliably measured then they are carried at historic cost. Where there is a significant or prolonged decline in the carrying value of an available for sale financial asset (which constitutes objective evidence of impairment), the full amount of the impairment, including any amount previously recognised directly in equity within the available-for-sale reserve, is recognised in profit or loss. Purchases and sales of available for sale financial assets are recognised on settlement date with any change in carrying value between trade date and settlement date being recognised in the available-for-sale reserve. On sale, the cumulative gain or loss recognised in other comprehensive income is reclassified from the available-for-sale reserve to profit or loss.
1.15 Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset such as receivables from subsidiaries. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group or Company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.
1.16 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at the bank and other short term liquid investments with original maturities of three months or less.
1.17 Trade payables
Trade payables, defined as financial liabilities in accordance with IAS 39, are recognised at amortised cost. All of the trade payables are non--interest bearing.
1.18 Share capital
Ordinary shares are classified as equity. Ordinary shares allotted under a Liquidity Facility Agreement and an associated Promissory Note (Note 17) are only recognised as equity on sale and issue to a third party. Shares which remain unsold at the reporting date are not included within the share capital and share premium account as they are not considered called up.
1.19 Share based payments and warrants
For equity--settled share--based payments, the fair value determined at the date of grant is expensed on a straight--line basis over the vesting period. Fair value is measured by the use of the Black Scholes model. The calculation of this fair value is detailed in Note 19.
1.20 Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost less impairment provisions.
2. Segmental reporting - Analysis by geographical segment
The Group's revenue arises within the US. The loss before taxation arises within the UK and US. Net assets are in the UK and US. Based on an analysis of risks and returns, the Directors consider that the Group has one principle business segment based on geography, with the UK representing head office costs of the Group. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, and the Finance Director. The Directors therefore consider that no further segmentation is appropriate.
United United United United
States Kingdom Total States Kingdom Total
Year ended 30 September 2014 2014 2014 2013 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -------- -------- -------- --------
Revenue 15 - 15 11 - 11
Cost of sales (4) - (4) (4) - (4)
--------------------------------- -------- -------- -------- -------- -------- --------
Gross profit 11 - 11 7 - 7
--------------------------------- -------- -------- -------- -------- -------- --------
Depreciation - - - - (9) (9)
Administrative expenses (13) (728) (741) (8) (855) (863)
--------------------------------- -------- -------- -------- -------- -------- --------
Operating loss (2) (728) (730) (1) (864) (865)
--------------------------------- -------- -------- -------- -------- -------- --------
Financial income
Financial expense - - - - 1 1
Finance costs - (2) (2) - (1) (1)
-------- -------- -------- -------- -------- --------
Loss for the year
operations
operaoperations (2) (730) (732) (1) (864) (865)
Total loss (2) (730) (732) (1) (864) (865)
--------------------------------- -------- -------- -------- -------- -------- --------
Non-Current assets:
- exploration and development
licences 7,501 - 7,501 7,107 - 7,107
- technology licence 1,314 - 1,314 1,314 - 1,314
- Available for sale financial
assets - 3,262 3,262 - 3,262 3,262
--------------------------------- -------- -------- -------- -------- -------- --------
8,815 3,262 12,077 8,421 3,262 11,683
-------------------------------- -------- -------- -------- -------- -------- --------
Current assets:
Trade and other receivables
Cash and cash equivalents 29 1,034 1,063 28 35 63
Cash and cash equivalents 1 89 90 303 933 1,236
--------------------------------- -------- -------- -------- -------- -------- --------
Total assets 8,845 4,385 13,230 8,752 4,230 12,982
--------------------------------- -------- -------- -------- -------- -------- --------
Current liabilities:
Trade and other payables - (222) (222) (187) (34) (221)
Total liabilities - (222) (222) (187) (34) (221)
--------------------------------- -------- -------- -------- -------- -------- --------
3. Finance income
2014 2013
GBP'000 GBP'000
--------------- --------- --------
Bank interest - 1
- 1
------------------------- --------
4. Finance costs
2014 2013
GBP'000 GBP'000
Bank charges 2 1
-------------- -------- --------
2 1
-------------- -------- --------
5. Operating loss
2014 2013
The following items have been charged in arriving GBP'000 GBP'000
at operating loss:
--------------------------------------------------- -------- --------
Depreciation of property, plant and equipment - 9
Directors' fees (Note 7) 314 316
Auditors' remuneration:
- audit services 26 24
Rentals payable in respect of land and buildings 7 38
--------------------------------------------------- -------- --------
6. Taxation
There is no tax charge in the year due to the loss for the year.
Factors affecting the tax charge:
2014 2013
GBP'000 GBP'000
---------------------------------------------- -------- --------
Loss on ordinary activities before tax (732) (865)
---------------------------------------------- -------- --------
Loss on ordinary activities at standard rate
of corporation tax in the UK of 22.0% (2013
- 23.5%) (161) (203)
Effects of:
Excess management expenses carried forward 161 203
Tax charge for the financial year - -
---------------------------------------------- -------- --------
7. Employees and Directors
The Group has no employees other than the directors, whose emoluments comprise fees paid for services. Share--based payments relate to warrants issued, further details of which are included in Note 19. The amounts paid for their services are detailed below:
Salaries Salaries
2014 2013
GBP'000 GBP'000
-------------------- --------- ---------
N Bonsor 71 71
P Rankine 139 141
M Haromo 104 104
Total remuneration 314 316
-------------------- --------- ---------
8. Loss per share
Basic loss per share is calculated by dividing the losses attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Reconciliations of the losses and weighted average number of shares used in the calculations are set out below.
Weighted
average
Number Per share
Losses of shares Amount
Financial year ended 30 September GBP'000 '000 Pence
2014
---------------------------------------- -------- ---------- ----------
Basic and Diluted EPS
Losses attributable to ordinary
shareholders on continuing operations (732) 1,782,051 (0.04)
---------------------------------------- -------- ---------- ----------
Total losses attributable to ordinary
shareholders (732) 1,782,051 (0.04)
---------------------------------------- -------- ---------- ----------
Financial year ended 30 September GBP'000 '000 Pence
2013
---------------------------------------- -------- ---------- -------
Basic and Diluted EPS
Losses attributable to ordinary
shareholders on continuing operations (865) 1,709,363 (0.05)
---------------------------------------- -------- ---------- -------
Total losses attributable to ordinary
shareholders (865) 1,709,363 (0.05)
---------------------------------------- -------- ---------- -------
The warrants which were in issue at the year end (Note 19) are considered anti-dilutive. As the options and warrants would be anti-dilutive a separate diluted loss per share is not presented.
9. Intangible assets
Oil & Gas Oil & Gas Oil & Gas
Exploration Technology Total
and development licence
licence
GBP'000 GBP'000 GBP'000
---------------------- ----------------- ----------- ----------
Cost
At 1 October 2012 6,781 1,314 8,095
---------------------- ----------------- ----------- ----------
Additions 326 - 326
---------------------- ----------------- ----------- ----------
At 30 September 2013 7,107 1,314 8,421
---------------------- ----------------- ----------- ----------
Additions 394 - 394
---------------------- ----------------- ----------- ----------
Net book value
At 30 September 2014 7,501 1,314 8,815
---------------------- ----------------- ----------- ----------
At 30 September 2013 7,107 1,314 8,421
---------------------- ----------------- ----------- ----------
At 30 September 2012 6,781 1,314 8,095
---------------------- ----------------- ----------- ----------
The exploration and development licences comprise two State of Utah oil shale leases covering approximately 2,919 acres and independent natural resources consultants SRK Consultants Ltd, part of the internationally recognised SRK Group, has declared a surface mineable JORC compliant Measured Resource of 126 million barrels on the main tract of TomCo's Holliday Block lease. The claim areas and the Group's interest in them is:
Asset Per cent Licence
Interest Status Expiry Date Licence Area (Acres)
ML 49570 100 Prospect 31/12/2024 1,638.84
ML 49571 100 Prospect 31/12/2024 1,280.00
In performing an assessment of the carrying value of the licences at the reporting date, the Directors concluded that it was not appropriate to book an impairment. The Directors do not consider the asset to be impaired as there is a planned programme of development work for the next year which will add to the Company's knowledge and understanding of the asset. As the data from this programme is collated and analysed we will inform our shareholders through the Regulatory News Service of the results. As shareholders you are aware of the potential for these assets but the directors draw your attention to the likely need to raise additional funds in the future in order to continue to explore and develop the asset and bring it into commercial production. At this early stage of the project the Directors do not consider that there is any need for any impairment of the valuation of the asset. The Group has obtained resource assessments in relation to its oil shale leases, the latest of which shows 126 million barrels of oil in surface mineable JORC Measured Resource. If the required additional funding was not to be made available to the company, the carrying value of the asset might need to be impaired.
The oil and gas technology licence was signed in 2010 and grants to TomCo an exclusive, site-specific license of certain patent rights and "know how" relating to the EcoShale In-Capsule Process (TM), developed by Red Leaf Resources Inc. ("Red Leaf"). Under the terms of the License, Red Leaf has agreed to provide TomCo with all new patents, techniques, information and new discoveries in relation to the EcoShale(TM) system. The directors consider that as the testing of the EcoShale(TM) technology continues to progress as planned, with initial test results showing that the technology works on a small scale, no impairment of the oil and gas technology licence is required.
10. Property, plant and equipment
Group Oil properties Fixtures, fittings Total
and equipment
Cost GBP'000 GBP'000 GBP'000
---------------------- --------------- -------------------- --------
At 1 October 2012 102 32 134
---------------------- --------------- -------------------- --------
At 30 September 2013 102 32 134
---------------------- --------------- -------------------- --------
At 30 September 2014 102 32 134
---------------------- --------------- -------------------- --------
Depreciation
---------------------- --------------- -------------------- --------
At 1 October 2012 102 23 125
---------------------- --------------- -------------------- --------
Charge in year - 9 9
---------------------- --------------- -------------------- --------
At 30 September 2013 102 32 134
---------------------- --------------- -------------------- --------
Charge in year - - -
---------------------- --------------- -------------------- --------
At 30 September 2014 102 32 134
---------------------- --------------- -------------------- --------
Net book value
At 30 September 2014 - - -
---------------------- --------------- -------------------- --------
At 30 September 2013 - - -
---------------------- --------------- -------------------- --------
At 30 September 2012 - 9 9
---------------------- --------------- -------------------- --------
Company Fixtures, Total
fittings and
equipment
Cost GBP'000 GBP'000
---------------------------------- -------------- --------
At 1 October 2012, 2013 and 2014 32 32
---------------------------------- -------------- --------
Depreciation
At 1 October 2012 23 23
Depreciation 9 9
At 1 October 2013 32 32
Depreciation - -
---------------------------------- -------------- --------
At 30 September 2014 32 32
---------------------------------- -------------- --------
Net book value
At 30 September 2014 - -
---------------------------------- -------------- --------
At 30 September 2013 - -
At 30 September 2012 9 9
---------------------------------- -------------- --------
11. Company investment in subsidiaries
Shares in Group undertakings
Total
GBP'000
---------------------- --------
Cost
---------------------- --------
At 1 October 2012 6,781
---------------------- --------
Additions 326
---------------------- --------
At 30 September 2013 7,107
---------------------- --------
Additions 394
---------------------- --------
At 30 September 2014 7,501
---------------------- --------
The investments in subsidiaries, which the Directors consider are supported by their assessment of the carrying value of the intangible oil and gas assets in the subsidiary, are not considered impaired. For further details see Note 9.
TomCo Energy plc holds interests in the following subsidiaries:
Subsidiary Undertaking Country of incorporation Proportion of Nature of business
or registration voting rights
and ordinary share
capital held
----------------------- ------------------------- -------------------- ---------------------
The Oil Mining Utah, USA 100% Holding of oil shale
Company Inc leases
----------------------- ------------------------- -------------------- ---------------------
TomCo I LLC Delaware, USA 100% Holding company
of TomCo II
----------------------- ------------------------- -------------------- ---------------------
TomCo II LLC Delaware, USA 100% indirect TomCo II is engaged
holding in the exploration
and extraction of
oil and gas through
joint investment
in oil leases
----------------------- ------------------------- -------------------- ---------------------
12. Available--for--sale financial assets
Unlisted
investments
Cost GBP'000
------------------------------- ------------
At 1 October 2012 3,442
Additions -
------------------------------- ------------
At 30 September 2013 3,442
--------------------------------- ------------
Additions -
At 30 September 2014 3,442
Provisions
At 30 September 2013 and 2014 180
180
------------------------------- ------------
Net book value
At 30 September 2014 3,262
--------------------------------- ------------
At 30 September 2013 3,262
At 30 September 2012 3.262
--------------------------------- ------------
During the year to 30 September 2012, the Company invested $5 million (GBP3,147,735) in Red Leaf Resources Inc (Equity securities US (3)) at $1,500 per share as part of a $100 million raising by Red Leaf in conjunction with the closing of a Joint Venture ("JV") with Total E&P USA Oil Shale, LLC, an affiliate of Total SA, the 5(th) largest international integrated oil and gas company.
The Directors consider that the fair value of the investment cannot be reliably measured and so, as permitted by IFRS, the asset is stated at original cost. There is a risk that in the future this investment falls in value and the Group is unable to realise its accounting value. TomCo continues to monitor the progress of Red Leaf and in the event that the value is deemed by the Group to have declined, an impairment will be recognised. The Directors believe no such impairment has occurred to date. Red Leaf has completed its permitting for Seep Ridge and has started constructing the EPS Capsule.
Details of unlisted investments
Share Percentage Average cost
holding holding per share Cost
Name number % GBP'000
---------------------- ---------- ----------- -------------- --------
Equity securities US
(1) 9,751 0.78 31pence 30
Equity securities UK 471,070 3.47 20 pence 94
Equity securities US
(2) 1,000,000 8.12 5 pence 56
Equity securities US
- Red Leaf 3,333.33 0.43 1,500 dollars 3,262
---------------------- ---------- ----------- -------------- --------
The Directors provided in full for the investment in equity securities in the US (1) in 2007 due to the uncertain future of the Company. The Equity securities, US (2) and UK were also provided in full in 2008 due to uncertainties about the future of those Companies.
13. Trade and other receivables
Group Company Group Company
2014 2014 2013 2013
Current GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- --------
Other receivables 1,037 1,008 47 18
Prepayments and accrued
income 26 26 16 16
1,063 1,034 63 34
------------------------- -------- -------- -------- --------
Non- current
Amounts owed from Group
undertakings - - - 137
------------------------- -------- -------- -------- --------
Total Receivables 1,063 1,034 63 171
------------------------- -------- -------- -------- --------
As at 30 September 2014 there were no receivables considered past due (2013: GBPNil). The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable including cash and cash equivalents as disclosed in Note 20.
All current receivable amounts are due within 6 months.
14. Cash and cash equivalents
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- --------
Cash at bank and in
hand 90 89 1,236 933
--------------------- -------- -------- -------- --------
The Group earns 0.05% (2013: 0.05%) interest on their cash deposits, consequently the Group's exposure to interest rate volatility is not considered material.
15. Trade and other payables
Group Company Group Company
2014 2014 2013 2013
Current GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- --------
Trade payables 28 28 3 3
Other payables 24 24 8 8
Accruals 170 170 210 23
222 222 221 34
----------------------- -------- -------- -------- --------
Non-current
Amounts owed to Group
undertakings - - - 5
----------------------- -------- -------- -------- --------
Total Payables 222 222 221 39
----------------------- -------- -------- -------- --------
All current amounts are payable within 6 months and the Board of Directors considers that the carrying values adequately represent the fair value of all payables. In the opinion of the directors the carrying value of the financial liabilities approximates to their fair value.
16. Deferred tax
Unrecognised losses
The Company has tax losses in respect of excess management expenses of GBP9,144,742 (2013: GBP8,395,275) available for offset against future Company income. This gives rise to a potential deferred tax asset at the reporting date of GBP1,828,948 (2013: GBP2,098,819). No deferred tax asset has been recognised in respect of the tax losses carried forward as the recoverability of this benefit is dependent on the future profitability of the Company, the timing of which cannot reasonably be foreseen but the excess management expenses have no expiry date.
17. Share capital
2014 2013
Number of GBP GBP
shares
------------------------------------- ------------ ----------- ----------
Issued and fully paid
At 1 October 9,347,279 8,105,246
------------------------------------- ------------ ----------- ----------
Allotted during prior year:
January 2013 - Liquidity Facility 100,000,000 - 500,000
March 2013 - subscription at
1.2 pence per share 148,406,526 - 742,033
------------------------------------- ------------ ----------- ----------
Allotted during current year:
September 2014 - placing at
0.5 pence per share 200,000,000 1,000,000 -
September 2014 - in lieu of
expenses at 0.5 pence per share* 3,000,000 15,000 -
------------------------------------- ------------ ----------- ----------
1,015,000 1,242,033
------------------------------------- ------------ ----------- ----------
2,072,455,744 (2013: 1,869,455,744)
ordinary shares of 0.5p each 10,362,279 9,347,279
------------------------------------- ------------ ----------- ----------
Balance of Shares issued under
Promissory Note not called
up:
At 1 October 100,000,000 (453,379) (500,000)
Called up in prior year (9,324,169) - 46,621
------------------------------------- ------------ ----------- ----------
Called up in current year (4,405,000) 22,205 -
------------------------------------- ------------ ----------- ----------
At 30 September 86,270,831 (431,354) (453,379)
------------------------------------- ------------ ----------- ----------
9,930,925 8,893,900
------------------------------------- ------------ ----------- ----------
* Non-cash transactions
17. Share capital (continued)
In 2013 the Group entered into a Liquidity Facility Agreement and an associated Promissory Note (together the "Liquidity Facility") with Windsor Capital Partners Limited ("Windsor Capital"). Under the Liquidity Facility TomCo issued and allotted 100 million ordinary shares of 0.5p each ("Ordinary Shares") to Windsor Capital in exchange for the Promissory Note. The Promissory Note delivers the proceeds of the sale of the Ordinary Shares over the life of the Promissory Note based on the occurrence of "Liquidity Trigger Days". Liquidity Trigger Days are those days on which the volume of shares traded is greater than 80% of the trailing 90 day weighted average daily trading volume. On Liquidity Trigger Days, Windsor Capital will seek to sell Ordinary Shares, up to a maximum of 10% of the daily volume averaged over any 5 day period, on a best effort basis at the AIM Market offer-price or higher. The Liquidity Facility was suspended on 28 May 2013, and reinstated on 23 September 2013 amended by way of introducing a floor price of 2p per share and limiting the maximum net amount raised following the announcement to one million pounds. These amended conditions were subsequently removed in May 2014. Shares which remain unsold at the reporting date are not included within the share capital and share premium account as they are not considered called up.
During the period, the Group raised a net amount of GBP52,853 (2013: GBP153,275) under the facility by the sale of 4,405,000 ordinary shares (2013: 9,324,169).
During the period, the Group also raised GBP1.0 million before expenses through a conditional share placing of 200,000,000 new ordinary shares of 0.5p each at a price of 0.5 per share. The placing completed in full on 2 October 2014 with all cash proceeds received in October.
18. Share premium
2014 2013
GBP'000 GBP'000
--------------------------------------- -------- --------
At 1 October 14,636 13,629
Premium on shares issued in the year 30 1,140
Expenses on shares issued in the year (88) (133)
At 30 September 14,578 14,636
--------------------------------------- -------- --------
19. Share--based payments
At 30 September 2014, the following share warrants granted for services and shares are outstanding in respect of the ordinary shares:
2014 2014 2013 2013
Weighted average Weighted average
exercise price exercise price
number Pence number Pence
-------------------- ---------- ----------------- ------------- -----------------
Outstanding at 1
October 7,420,326 1.2 65,424,778 2.5
Granted during the
year - - 7,420,326 1.2
Lapsed during the
year - - (65,424,778) 2.5
-------------------- ---------- ----------------- ------------- -----------------
Outstanding at 30
September 7,420,326 1.2 7,420,326 1.2
-------------------- ---------- ----------------- ------------- -----------------
Exercisable at 30
September 7,420,326 1.2 7,420,326 1.2
-------------------- ---------- ----------------- ------------- -----------------
Each warrant is governed by the provisions of warrant instruments representing the warrants which have been adopted by the Company. The rights conferred by the warrants are transferable in whole or in part subject to and in accordance with the transfer provisions set out in the Articles. The holders of warrants have no voting right, pre-emptive right or other right attaching to Ordinary Shares. All warrants issued have vested in full. The warrants outstanding at 30 September 2014 had a weighted average exercise price of 1.2p (2013: 1.2p) and a weighted average remaining contractual life of 1.45 years (2013: 2.45 years). On completion of the placing (Note 17), on 2 October the Company issued 12,000,000 warrants with an exercise price of 0.5p and a contractual life of 5 years.
The inputs into the Black--Scholes model for calculating estimated fair value were:
2013
---------------------------- -----
Weighted average share
price (pence) 1.5
Weighted average exercise
price (pence) 1.2
Expected volatility 55%
Risk--free rate 3%
Weighted average remaining
contractual life (years) 2.45
----------------------------- -----
Expected volatility was determined by calculating the historical volatility of the Company's share or the volatility of a basket of similar listed companies where the historic volatility was not available. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non--transferability, exercise restrictions and behavioural considerations.
20. Financial instruments
The Group and Company's financial instruments, other than its investments, comprise cash and items arising directly from its operation such as other receivables, and trade payables.
Management review the Group and Company's exposure to currency risk, interest rate risk, liquidity risk and credit risk on a regular basis and consider that through this review they manage the exposure of the Group and Company. No formal policies have been put in place in order to hedge the Group and Company's activities to the exposure to currency risk or interest risk, however, this is constantly under review.
There is no material difference between the book value and fair value of the Group and Company's cash and other financial
instruments.
Currency risk
The Group has overseas subsidiaries which operate in the United States and whose expenses are mainly denominated in US$. Foreign exchange risk is inherent in the Group and Company's activities and is accepted as such. Some of the Company's expenses are denominated in US Dollars. The effect of a 10% strengthening or weakening of the US dollar against sterling at the reporting date on the sterling denominated balances would, all other variables held constant, not result in a significant exchange gain or loss in the period.
Interest rate risk
The Group and Company manage the interest rate risk associated with the Group cash assets by ensuring that interest rates are as favourable as possible, whether this is through investment in floating or fixed interest rate deposits, whilst managing the access the Group requires to the funds for working capital purposes.
The Company's cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.
A 1% increase or decrease in the floating rate attributable to the cash balances held at the year end would not result in a significant difference on interest receivable.
Liquidity risk
At the year end the Group and Company had cash balances comprising of the following:
Group Company Group Company
2014 2014 2013 2013
Current GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- -------- --------
British Pounds 86 86 929 929
US Dollars 4 3 307 4
Total 90 89 1,236 933
---------------- -------- -------- -------- --------
Liquidity risk arises from the Group and Company's management of working capital and the finance charges and principal repayments on any debt instruments. It is the risk that the Group and Company will encounter difficulty in meeting its financial obligations as they fall due.
The Group and Company policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 90 days. The group seeks to reduce liquidity risk by fixing interest rates (and hence cash flows) on any long term borrowings.
Credit Risk
Credit risk is the risk of financial loss to the Group and Company if a customer or a counter party to a financial instrument fails to meet its contractual obligations. The Group and Company is exposed to credit risk from its relationship with its partners and is mainly exposed to credit risk from credit sales. It is Group and Company policy, implemented locally, to assess the credit risk of new customers before entering contracts in accordance with best local business practices, and seek external credit ratings where applicable and when available. Credit risk of existing customers is assessed when deemed necessary.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with an acceptable rating are utilised.
Price Risk
The Group is exposed to commodity price risk on its income and assets relating to oil exploration and production. The Group carries out sensitivity analyses for internal management purposes to identify possible impacts on future projections.
Capital management policies
In managing its capital, the Group and Company's primary objective is to maintain a sufficient funding base to enable the Group and Company to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, through new share issues or debt, the Group and Company considers not only its short-term position but also its long-term operational and strategic objectives.
21. Related party disclosures
The Directors are considered to be Key Management and information in respect of key management is given in Note 7.
Transactions between the Company and its subsidiaries and related parties during the year are summarised below:
2014 2013
------------------------------------ ------ --------
GBP GBP
Inter-group receivable outstanding
at year end - 137,800
Inter-group payable outstanding
at year end - 5,666
Fees paid to shareholder
and advisor under project
finance and management agreement - 112,000
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EALALESKLFFF
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