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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Highlands Natural Resources Plc | LSE:HNR | London | Ordinary Share | GB00BWC4X262 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 4.70 | 4.60 | 4.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHNR
RNS Number : 6566I
Highlands Natural Resources PLC
21 June 2017
21 June 2017
Highlands Natural Resources plc ('Highlands' or 'the Company')
Final Results
Highlands, the London listed natural resources company, is pleased to provide its Final Results for the period ended 31 March 2017.
Highlights
-- Bolstered portfolio with acquisition of two new projects in line with 80:20 strategy (near-term production/exploration) - independently valued with combined valuation range of US$441.8 million to US$600.1 million
-- Portfolio now consists of three core projects: -- East Denver Niobrara Project - shale oil and gas in Colorado:
o Secured farm-in agreements and prime acreage acquisition with ConocoPhilips and Renegade Oil & Gas enabling Highlands to drill as many wells as possible until YE 2018
o NPV(10) value ranging between US$23.4 million and US$124.6 million for 6-24 well programme
o Currently in negotiations regarding funding
-- Helios Two Project - helium and methane in Montana
o Drilled first production well into Muddy Formation
o Dewatering process confirmed helium and methane content
o CPR by RPS indicates "best estimate success case" NPV(10) of US$341 million for the natural gas development alone
-- DT Ultravert - parent well protection and re-fracking technology
o Significant progress in commercialisation with first patent received post-period end
o Two successful tests completed in Piceance Basin
o Identified two potential applications: as a re-fracking agent; parent well protection
o Secured Calfrac Licence Agreement and extended Schlumberger agreement
Highlands Chairman Robert Price said, "This has been an incredibly exciting year for Highlands which has seen us expand our asset base to provide our shareholders with exposure to a diverse portfolio of high potential resource projects. With our three core projects all having company-making potential, we are eager to continue progressing them with a focus on our East Denver Niobrara drilling programme with a view to achieving near term cash flows and potential profitability."
Chairman's Statement
I am pleased to report that Highlands has been extremely active this year and has significantly expanded its asset base and enhanced its opportunities for the future. In particular, the Group acquired its "East Denver" and "Helios Two" projects during the year, both of which have the ability to transform the Group alongside its existing DT Ultravert technology.
The Board has stated its strategy is to establish a portfolio where 80% of the Group's portfolio should be comprised of production assets capable of providing a stable income, with the balancing 20% of the portfolio providing significant potential upside, albeit at a higher risk, through oil and gas exploration. The East Denver project fits into the 80% category whilst, at present, the DT Ultravert and Helios Two projects form part of the 20% category. It is the view of the Board that the Company's portfolio of projects provides numerous opportunities to realise substantial value for Shareholders.
The Group's core portfolio consists of:
Hot Features
Premium
-- the East Denver Niobrara Project ('East Denver');
-- the Helios Two Project ('Helios Two'); and
-- its patent-granted and patent-pending DT Ultravert technology.
East Denver
The Group has farm-out agreements in Arapahoe County, Colorado with Renegade and ConocoPhillips, which collectively allow Highlands to drill as many wells as possible (up to Highlands' determination of optimal well spacing) until the end of 2018 in acreage highly prospective for the Niobrara shale formation.
In July 2016, Highlands completed a farm-out agreement with Renegade in Colorado to drill up to six lateral wells in acreage prospective for the Niobrara Shale Formation, located in the Denver Julesburg ('DJ') Basin. An independent engineering report published on 29 August 2016 by McCartney Engineering ('McCartney') indicated a probable category NPV(10) of US$21.5 million for the first six extended lateral wells with an IRR of 92 per cent.
Given the compelling economics highlighted by the initial engineering report, in December 2016 the Board made the decision to extend the Group's contiguous acreage to a total of 3,840 acres via an additional farm-out with ConocoPhillips and lease acquisition from Renegade. Under the terms of the ConocoPhillips farm-out agreement, Highlands has the opportunity to drill and complete as many wells as possible (up to the level determined to be optimal well spacing and subject to certain required approvals). Highlands' land position is located in close proximity to numerous wells that have produced in excess of 100,000 barrels of oil in their first six months of production.
The Group commissioned a further report on the East Denver prospect from engineering firm RPS. This demonstrated an "1P" Proved NPV(10) range for six wells of US$13.2 million to US$17.4, increasing to an "1P" Proved NPV(10) between US$56.3 million and US$73.4 million for a proposed 24 well development programme. This validated the Group's decision to extend its acreage and the Directors believe that this further confirms the potential of near-term cash flow from East Denver.
To date the Group has invested approximately US$3.2 million in its East Denver assets.
Following the announcement of the farm-out agreement with ConocoPhillips, the Board initiated a competitive fundraising process with the support of the speciality energy investment banking firm Petrie Partners Securities, LLC. The Group has presented the East Denver project to more than 20 investment firms specialised in energy investment and has received a very positive and encouraging level of response. Highlands is currently working through a process of negotiating, selecting and finalising definitive agreements with its preferred investors. Any such investment, if finalised, would take a direct share of the East Denver project and not in the share capital of the Group. The advantage to Shareholders of these arrangements (if finalised) is that the investor would be obliged to pay a significant share of the costs of the project in order to earn their equity share in it.
A 24-well drilling programme may cost in the region of US$120 million or more and the Group's primary objective for the third party funding will be for an investor or group of investors to fund a majority of the capital costs of the East Denver project, with the Group covering the remainder. This funding may be staged over multiple tranches, with Highlands paying for a larger share of initial wells and the project investors covering more or all of the capital costs of later tranches of wells once the first tranche "de-risks" the project. Additionally, the Group may engage more than one investor with varying levels of risk tolerance in order to use lower-cost capital on later stages of development once investors perceive lower risk levels as a result of potentially successful early drilling efforts.
DT Ultravert
The Group has remained focused on the commercialisation of its DT Ultravert parent-well protection and refracking technology. The Group has now identified two potential applications for the technology, which could present very significant revenue streams in the future. In a separate report on the DT Ultravert technology, RPS identified an indicative success case value (NPV(10) ) for DT Ultravert at US$58.3 million in a report dated 15 December 2015. This figure was increased by a new report in January 2017 to between US$78 million and US$135 million subject to further successful testing and commercialisation as a well refracturing and anti-bashing technology.
The first application for DT Ultravert is as a re-fracking agent, which could dramatically increase production from already stimulated horizontal and vertical wells. The Group presented the technology to a number of E&P companies and service providers, and in recognising the technical and practical merit of DT Ultravert, in 2015 the Group entered into an indicative terms agreement with Schlumberger to test DT Ultravert in the Piceance Basin in Colorado, which was extended in September 2016.
Highlands has also secured a licence agreement with Calfrac, a leading pressure-pumping provider in the US, in relation to DT Ultravert. Calfrac has licensed DT Ultravert on a shared exclusivity basis for use in connection with its commercial hydraulic fracturing operations, activities and services in seven US states. The licence agreement has an initial term of two years and will then automatically renew for consecutive one year periods, unless and until terminated. Additionally, Highlands has the exclusive right to market nitrogen gas to Calfrac at current market rates for all fracking operations undertaken by Calfac using DT Ultravert throughout the term of the licence agreement. Highlands and Diversion are collectively entitled to a 2 per cent royalty based on the revenue received by Calfrac from each fracking operation during the term of the licence agreement which uses the DT Ultravert re-fracking technology.
Throughout the year the Group has promoted the DT Ultravert concept and technology across the industry and has brought in additional staff to assist in the technical and marketing process. Following this, the Group signed its first commercial agreement for use of DT Ultravert in a vertical well re-frack with a prominent operator in the Denver Julesburg Basin, with an expectation to identify an initial well and commence operations in the near-term. That test was subsequently postponed due to a change in the operator's plans for its wellfield operations and logistics. However, the Group continues to communicate with the operator regularly in anticipation of re-initiating the project in the near-term. More generally, the Group accelerated its marketing efforts for DT Ultravert throughout the first quarter of 2017 in order to demonstrate the technical merit of DT Ultravert and secure additional commercial opportunities for DT Ultravert.
When the Group acquired its interest in DT Ultravert in 2015, the Board's initial plan was to seek to licence the technology to third parties in return for a royalty. The advantage of this strategy was primarily the low capital cost that Highlands would incur. With licences with Schlumberger and Calfrac secured, Highlands has investigated other methods of monetising its investment in DT Ultravert. One area of focus is a new business model whereby the Group would invest 100 per cent of the cost of the re-frack in exchange for 90 per cent of the incremental "wedge production" achieved from the re-frack, until such as time as the Group recovers a 200 per cent return of its costs (cost recovery plus 100 per cent). Beyond this 200 per cent mark, all incremental wedge production reverts to the operator. As well as providing Highlands with a potential financial return, this type of transaction will also bring the added benefit of showcasing the capabilities of DT Ultravert. This strategy would be initially cash intensive for the Group but, if successful, the payback on each investment would be rapid and this business model may allow the Group to quickly commercialise and scale DT Ultravert with partners across the oil and gas industry.
A second application was identified during the planning process for testing DT Ultravert as a re-fracking technology in the Piceance Basin in Colorado. 'Bashing' (which occurs when new wells are fracked near existing parent wells, often resulting in parent well damage and frac fluid infiltration), is a growing problem in the US oil and gas industry and the opportunity to test DT Ultravert as a way of protecting parent wells from this presented itself. The Group refers to this application as "Parent Well Protection". With shale providing thousands of candidates for this process, this has the potential to provide a significant opportunity for the Group. In September, the Group carried out its first field trial of the technology in the Piceance Basin with positive results, not only illustrating that DT Ultravert accomplished Parent Well Protection and prevented bashing but also demonstrated that new wells experienced production performance similar to fracks in virgin rock. The result highlighted that DT Ultravert can mitigate the risk of poor production in new wells, which is a growing concern in the oil and gas industry.
Due to the nature of the Group's stake in this technology, all technical, marketing and testing costs for the project are charged directly to the Income Statement. The direct testing costs and the cost of pursuing the patents during the year amounted to approximately US$0.5 million.
Positive test results to date have opened the door to additional potential Parent Well Protection applications in several major shale basins across the United States, and the Highlands team continues to advance discussions with multiple potential hosts. This marketing drive is being led by Domingo Mata, who joined the Group from Schlumberger where he was a senior engineer. Having presented it to a number of E&P companies and service providers, the Board is currently in discussions with regards to finalising a commercial Denver Julesburg Basin re-frack in the near term. In the meantime, the Group is advancing discussions with operators in the Permian, Williston, DJ and other major shale basins.
Post period end, the U.S. Patent Office issued Highlands' first DT Ultravert patent for Parent Well Protection. This is a major milestone for the Company and the grant represents the first issued patent among Highlands' portfolio of pending patent applications related to parent well protection and re-fracking. Based on the review and approval process for the Issued Patent, the Company is optimistic that additional patent applications may be approved and issued in due course.
Helios Two
In June 2016, the Group acquired exploration licences covering approximately 59,033 acres within the Custer, Carter and Fallon Counties in Montana, representing a potential natural gas and helium prospect, "Helios Two". The Directors believe that Helios Two is an attractive prospect, presenting numerous gas shows observed throughout the region where historic gas analysis indicated biogenic methane (natural gas) concentrations and 0.36 per cent helium content, similar to the Hugoton helium field, the largest natural accumulation of helium in the US. According to the 2017 U.S. Geologic Survey's "Mineral Commodity Report on Helium," the largest single consumer of helium is the magnetic resonance imaging (MRI) industry (equating to 30 per cent of consumption in the US), and with the mandated decommissioning of the US Bureau of Land Management ('BLM') Cliffside Field by 2021, which historically has accounted for 30 per cent of global helium production (US Senate Energy Committee testimony by Walter Nelson on May 7, 2013), there are increasing concerns regarding helium supply reliability. As a result, US BLM auction prices (Bureau of Land Management Crude Helium Price, www.blm.com, 17 May, 2017) have exceeded US$100 per thousand cubic feet ('mcf') of crude helium in the past two years - a price that dwarfs benchmark pricing of natural gas, which lies in the US$2.00 to US$3.00 per mcf range. A significant helium discovery could therefore reduce helium costs and, as a result, reduce health imaging costs.
A Competent Person's Report for Helios Two was commissioned and published on 24 June 2016, in which RPS indicated a "best estimate success case" NPV(10) of US$341 million for the natural gas development project alone from only a 69,120 acre area. Shareholders should note that this NPV(10) figure represents RPS's evaluation of the statistical mean or average expected economic value assuming that the proposed de-watering processes succeeds on a technical basis. In other words, RPS has not discounted this value assessment based on the technical or process-related risks, and has provided a valuation figure for a successful outcome scenario. Following the publication of the initial RPS CPR, Highlands subsequently acquired further licences bringing Helios Two to a total of 105,444 acres in the project area. The Group commenced drilling of the Helios Well 5-52-16-22 in September 2016, targeting the Muddy Formation (the 'Muddy Well'). The initial drill results provided encouraging data enabling de-watering to commence, which entails a period of pumping and de-pressurisation of the reservoir in order to facilitate gas expansion and changes in relative permeability.
The Group optimised the de-watering process by installing a new electric submersible pump operated by Schlumberger into the Muddy Well, and obtained a permit for a disposal well as a long-term water disposal solution. Following the publication of an updated CPR in January 2017 which confirmed RPS' earlier findings, the Group reported that gas analysis at two independent gas laboratories confirmed the presence of 0.31 per cent to 0.33 per cent helium at Helios Two, providing conclusive evidence that helium is present in elevated concentrations at Helios Two and validating one of the primary considerations in Highlands's investment in the project. The Group is now focused on understanding the commerciality of this, drilling a disposal well, and accelerating the de-watering process to assess full-scale gas production rates and economics.
If full-scale de-watering is successful, the Directors believe that the Group will have substantially de-risked Helios Two from a scientific, technical and operational standpoint.
The costs to date in respect of the Helios Two project recognised as part of the Group's Exploration and Evaluation Assets amount to US$2.2 million.
Unfortunately, the Montana operations also suffered the Group's only setback in the year. Along with the "Muddy" well, the Group also drilled a second well, the "Eagle" well during the year. The aim was to use a different drilling technique and target a different shale formation. The primary goal of the exercise was achieved and the Eagle formation did produce natural gas in sufficient quantities to achieve intermittent surface flares, although without a stimulation treatment the flow rate was "too small to measure" using flow testing equipment. Importantly, Highlands drilled through approximately 800 feet of the formation without encountering significant saturation of water. Disappointingly, after logging the Eagle Well with a standard logging tool used in open holes, the Group's contractor dropped the tool back into the hole. Despite several retrieval efforts made by the contractor, the logging tool remained unrecovered. The Board, concerned by a risk of potential natural gas accumulations at surface during retrieval operations, decided to plug and abandon the well with the approval of Montana regulators. Therefore, although useful results were obtained, that well has now been closed and the costs of that particular operation, of approximately US$0.5 million have been charged directly to the Income Statement.
All of the reports referred to above from RPS are available on the Group's website and I recommend that shareholders review those reports along with other information provided.
Non-Core Portfolio
Outside of its core portfolio, the Group has other assets that it believes are value accretive and could provide significant upside potential. Whilst these are not currently viewed by the Board as forming part of the Group's core portfolio, these additional assets present future upside potential.
The Group acquired approximately 3,952 acres of land targeting the Niobrara and Muddy formations in Emmons County, North Dakota, which includes the shallow natural gas prospect, "Gravity".
Additionally, the Group acquired approximately 1,384 acres in Grand County, Utah which presents it with an in-situ uranium mining opportunity. The Group is currently in discussions with technical organisations to commission a CPR for this opportunity (although, as stated above, this is not currently a priority for Highlands).
Further details of these assets was provided in last year's Strategic Report.
Financial review
Funding
The Group is funded through investment from its shareholders. During the year, the Group successfully raised approximately GBP8.0 million through the issue of shares and the exercise of warrants (2016: approximately GBP1.9 million).
Revenue
The Group has generated no revenue from its operations in the year. The transactions undertaken so far have focussed on the acquisition of assets and rights that will be capable of generating revenue for the Group in future years and the evaluation of those assets.
Expenditure
The Group has invested a further GBP4.4m in its Exploration and Evaluation Assets during the year, a mixture of initial acquisition costs plus follow on evaluation expenditure, of which GBP0.9 million was settled by the issue of shares rather than in cash.
Total costs for the year charged to the Income Statement amounted to GBP3,370,000 (2016: GBP1,818,000), including non-cash charges of GBP220,448 (2016: GBP636,000) in respect of the options issued during the period. With the expansion of the Group's activities, the costs in both administrative and exploration areas have risen sharply. The recruitment of key staff into our Denver operations drove an increase in payroll costs from GBP107,000 to GBP605,000, in addition to which we incurred sub-contract costs of GBP214,000 for these personnel before they joined the Group as employees. The costs also include drilling, testing and consultancy costs charged directly to the profit and loss account of GBP684,000. These were principally the costs of the "Eagle" well which was drilled and then shut in during the year following a mistake by a subcontractor, plus the costs of testing the DT Ultravert technology. The Group incurs significant legal, professional, regulatory and consultancy costs both in its Denver operations and in connection with its listing on the London Stock Exchange. Whilst the costs are constrained as far as is possible, the Group has been active in its pursuit of opportunities and in building up its portfolio of projects and complying with all relevant regulations. The loss for the year includes costs of approximately GBP808,000 in these areas.
Liquidity, cash and cash equivalents
At 31 March 2017, the Group held GBP1,934,000 (2016: GBP717,000) which is now held primarily in US Dollar denominated accounts to match the predominance of the Group's US cost base.
Outlook
Highlands benefits from a strong and committed management team and exposure to a range of assets which we believe have the potential to deliver value to Highlands and its shareholders.
In pursuit of its 80:20 strategy, the Directors have determined primarily to focus the Group's resources on developing the East Denver Niobrara project, which the Directors believe is both one of the lower risk opportunities within the portfolio as well as a project which could be capable of delivering positive cash flows and profits to the Group within 24 months, along with pursuing the commercialisation of DT Ultravert and continuing to "prove" the Helios Two prospect.
The Group will need access to additional funds to enable it to capitalise on these opportunities and the Board is exploring a number of different avenues to accessing such funds. In essence, these centre around access to third party funding based on third party participation in the East Denver prospect and additional shareholder funding through the issue of more shares. The final choice on timing and mix of these funds will depend not just upon the availability of such funds but also the relative dilution suffered by existing shareholders, either through the increase in share capital or the decrease in stake in the East Denver prospect.
With the additional finance to hand, the Board believes that the Group has an exciting future.
Over the past year, the Group has recruited a strong and committed team in the USA to work alongside the Board in developing the Group's strategy and assets and I would like to take this opportunity to thank them, our advisers and you, our shareholders, for the effort and support throughout the year.
Robert Brooks Price
Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAZRED 31 MARCH 2017
Year ended Period ended 31 March 2016
31 March 2017 GBP
GBP
Revenue - -
Administrative expenses (3,369,749) (1,818,049)
Operating loss (3,369,749) (1,818,049)
Finance income 477 1,378
Loss on ordinary activities before taxation (3,369,272) (1,816,671)
Taxation on loss on ordinary activities - -
Loss for the period (3,369,272) (1,816,671)
Items that may be re-classified subsequently to profit or loss:
Foreign exchange adjustment on consolidation (130,668) (10,581)
Total comprehensive loss for the period attributable to the equity
holders (3,499,940) (1,827,252)
--------------- ---------------------------
Loss per share (basic and diluted) attributable to the equity
holders (pence) (6.69) p (10.88) p
--------------- ---------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 MARCH 2017
At 31 March 2017 At 31 March 2016
GBP GBP
NON-CURRENT ASSETS
Tangible assets 9,737 -
Intangible assets 5,001,958 682,530
----------------- -----------------
5,011,695 682,530
----------------- -----------------
CURRENT ASSETS
Trade and other receivables 384,827 47,316
Cash and cash equivalents 1,934,486 717,427
----------------- -----------------
2,319,313 764,743
----------------- -----------------
TOTAL ASSETS 7,331,008 1,447,273
----------------- -----------------
CURRENT LIABILITIES
Trade and other payables 322,336 53,348
----------------- -----------------
TOTAL LIABILITIES 322,336 53,348
----------------- -----------------
NET ASSETS 7,008,672 1,393,925
----------------- -----------------
EQUITY
Share capital 3,389,367 1,491,175
Share premium account 7,639,622 643,575
Share based payments reserve 833,332 1,077,582
Foreign currency translation reserve (141,249) (10,581)
Retained loss (4,712,400) (1,807,826)
TOTAL EQUITY 7,008,672 1,393,925
----------------- -----------------
COMPANY STATEMENT OF FINANCIAL POSITION
AT 31 MARCH 2017
At 31 March 2017 At 31 March 2016
GBP GBP
NON-CURRENT ASSETS
Intangible assets 576,975 647,625
Investment in subsidiary 8,108,904 66
Loan to group undertaking - 238,556
8,685,879 886,247
----------------- -----------------
CURRENT ASSETS
Trade and other receivables 39,059 47,316
Cash and cash equivalents 671,235 502,428
----------------- -----------------
710,294 549,744
----------------- -----------------
TOTAL ASSETS 9,396,173 1,435,991
----------------- -----------------
CURRENT LIABILITIES
Trade and other payables 206,184 42,000
----------------- -----------------
TOTAL LIABILITIES 206,184 42,000
----------------- -----------------
NET ASSETS 9,189,989 1,393,991
----------------- -----------------
EQUITY
Share capital 3,389,367 1,491,175
Share premium account 7,639,622 643,575
Share based payments reserve 833,332 1,077,582
Retained loss (2,672,332) (1,818,341)
TOTAL EQUITY 9,189,989 1,393,991
----------------- -----------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
Share capital Share Share based Foreign Retained loss Total
Premium payment Currency
account reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP
At - - - - - -
incorporation
-------------- ------------- ------------- ------------- -------------- --------------
Comprehensive
income for the
period
Loss for the
period - - - - (1,816,671) (1,816,671)
Other - - - - - -
comprehensive
income
Translation
adjustment - - - (10,581) - (10,581)-
-------------- ------------- ------------- ------------- -------------- --------------
Total
comprehensive
loss for the
period
attributable
to the equity (10,581)
holders - - - - (1,816,671) (1,827,252)
Issue of
warrants - - 1,086,427 - 1,086,427
Exercise of
warrants (8,845) 8,845 -
Shares issued
in the period 1,491,175 681,825 - - - 2,173,000
Cost relating
to share
issues - (38,250) - - - (38,250)
At 31 March
2016 1,491,175 643,575 1,077,582 (10,581) (1,807,826) 1,393,925
-------------- ------------- ------------- ------------- -------------- --------------
At 31 March
2016 1,491,175 643,575 1,077,582 (10,581) (1,807,826) 1,393,925
-------------- ------------- ------------- ------------- -------------- --------------
Comprehensive
income for the
period
Loss for the
period - - - - (3,369,272) (3,369,272)
Other - - - - - -
comprehensive
income
Translation
adjustment - - - (130,668) - (130,668)
-------------- ------------- ------------- ------------- -------------- --------------
Total
comprehensive
loss for the
period
attributable
to the equity (130,668)
holders - - - - (3,369,272) (3,499,940)
Issue of
warrants and
options - - 220,448 - - 220,448
Exercise of
warrants - - (464,698) - 464,698 -
Shares issued
in the period 1,898,192 7,172,002 - - - 9,070,194
Cost relating
to share
issues - (175,955) - - - (175,955)
At 31 March
2017 3,389,367 7,639,622 833,332 (141,249) (4,712,400) 7,008,672
-------------- ------------- ------------- ------------- -------------- --------------
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
Share capital Share Premium Share based Retained loss Total
account payment reserve
GBP GBP GBP GBP GBP
At incorporation - - - - -
-------------- ------------------- ------------------- -------------- --------------
Comprehensive
income for the
period
Loss for the period - - - (1,827,186) (1,827,186)
Other comprehensive
income - - - - -
-------------- ------------------- ------------------- -------------- --------------
Total comprehensive
loss for the
period
attributable to
the equity holders - - - (1,827,186) (1,827,186)
Issue of warrants - - 1,086,427 - 1,086,427
Exercise of
warrants (8,845) 8,845 -
Shares issued in
the period 1,491,175 681,825 - - 2,173,000
Cost relating to
share issues (38,250) - - (38,250)
At 31 March 2016 1,491,175 643,575 1,077,582 (1,818,341) 1,393,991
-------------- ------------------- ------------------- -------------- --------------
At 31 March 2016 1,491,175 643,575 1,077,582 (1,818,341) 1,393,991
-------------- ------------------- ------------------- -------------- --------------
Comprehensive
income for the
period
Loss for the period - - - (1,318,689) (1,318,689)
Other comprehensive
income - - - - -
-------------- ------------------- ------------------- -------------- --------------
Total comprehensive
loss for the
period
attributable to
the equity holders - - - (1,318,689) (1,318,689)
Issue of warrants - - 220,448 - 220,448
Exercise of
warrants - - (464,698) 464,698 -
Shares issued in
the period 1,898,192 7,172,002 - - 9,070,194
Cost relating to
share issues - (175,955) - - (175,955)
At 31 March 2017 3,389,367 7,639,622 833,332 (2,672,332) 9,189,989
-------------- ------------------- ------------------- -------------- --------------
CONSOLIDATED CASHFLOW STATEEMNT FOR THE YEARED 31 MARCH 2017
2017 2016
Cash flow from operating GBP GBP
activities
Loss for the period (3,369,272) (1,816,671)
Adjustments for:
Depreciation and amortisation
charges 85,750 59,915
Charge for the period in
respect of Share-based payments 220,448 636,427
Cost settled by issue of
shares - 6,500
Operating cashflow before
working capital movements (3,063,074) (1,113,829)
Increase in trade and other
receivables (337,511) (47,316)
Increase in trade and other
payables 268,988 53,348
Net cash outflow from operating
activities (3,131,597) (1,107,797)
------------ ------------
Cashflows from investing
activities
Purchase of tangible fixed (11,876) -
assets
Investment in Intangible,
exploration and drilling
rights (4,403,039) (742,445)
Less: settled by issue of
share based payments 903,102 706,500
Net cash absorbed by investing
activities (3,511,813) (35,945)
------------ ------------
Cashflows from financing
activities
Net proceeds from issue
of shares 7,991,137 1,871,750
Net cash generated by financing
activities 7,991,137 1,871,750
------------ ------------
Net increase in cash and
cash equivalents
As above 1,347,727 728,008
Cash and cash equivalents 717,427 -
at start of period
Foreign exchange adjustment
on opening balances (130,668) (10,581)
Cash and cash equivalents
at the end of the year 1,934,486 717,427
------------ ------------
COMPANY CASHFLOW STATEEMNT FOR THE YEARED 31 MARCH 2017
2017 2016
Cash flow from operating activities GBP GBP
Loss for the period (1,318,689) (1,827,186)
Adjustments for:
Depreciation and amortisation
charges 70,650 58,875
Charge for the period in respect
of Share-based payments - 636,427
Cost settled by issue of shares - 6,500
Foreign exchange translation (290,451) -
adjustments
Provision against loan to
subsidiary 893,719 569,216
Operating cashflow before
working capital movements (644,771) (556,168)
Decrease/(increase) in trade
and other receivables 8,257 (47,316)
Increase in trade and other
payables 164,184 42,000
Net cash outflow from operating
activities (472,330) (561,484)
------------ ------------
Cashflows from investing activities
Purchase of Intangible and
mineral rights - (706,500)
Less: settled by issue of
share based payments - 706,500
Investment in subsidiary (7,350,000) (807,838)
Net cash absorbed by investing
activities (7,350,000) (807,838)
------------ ------------
Cashflows from financing activities
Net proceeds from issue of
shares 7,991,137 1,871,750
Net cash generated by financing
activities 7,991,137 1,871,750
------------ ------------
Net increase in cash and cash
equivalents
As above 168,807 502,428
Cash and cash equivalents 502,428 -
at start of period
Cash and cash equivalents
at the end of the period 671,235 502,428
------------ ------------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 MARCH 2017
1 GENERAL INFORMATION 1.1 Group
Highlands Natural Resources plc ("Highlands Natural Resources" or "the Company") and its subsidiary (together "the Group") are primarily involved in the oil and gas sector. Highlands Natural Resources plc, a public limited company incorporated and domiciled in England and Wales, is the Group's ultimate parent company. The Company was incorporated on 13 November 2014 with Company Registration Number 09309241 and its registered office and principal place of business is 9 Limes Road, Beckenham, Kent BR3 6NS. The comparative period covers the period from 13 November 2014 to 31 March 2016.
1.2 Company income statement
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The loss for the financial period dealt with in the accounts of the Company, including provision against the loans to subsidiary companies, amounted to GBP1,318,689 (2016: loss GBP1,827,186).
2. PRINCIPAL ACCOUNTING POLICIES 2.1 Basis of preparation
The Consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have been prepared under the historical cost convention. The principal accounting policies are set out below and have, unless otherwise stated, been applied consistently for all periods presented in these Consolidated Financial Statements. The financial statements are prepared in pounds sterling and presented to the nearest pound.
2.2 Basis of consolidation
The Group financial information incorporates the financial information of the Company and its controlled subsidiary undertakings, drawn up to 31 March 2017. Control is achieved where the Company:
-- has power of the investee; -- is exposed, or has rights, to variable return from its involvement with the investee; and -- has the ability to use its power to affect its returns.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
Where necessary, adjustments are made to the financial information of subsidiaries to bring accounting policies into line with those used for reporting the operations of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
2.3 Going concern
The financial statements have been prepared on a going concern basis which assumes that the Group will continue in operational existence for the foreseeable future.
The Group is still in its early development stage and has as yet no revenues. The Group is financed through the investment by its shareholders and during the year the Group raised GBP8.9 million, net of costs, from the exercise of warrants and the issue of shares. The Group made a loss for the year of GBP3.1 million before taxation and foreign exchange adjustments, and, taking into account non-cash items and other changes in working capital, the net cash outflow from operating activities was GBP2.85 million. In addition, the Group invested a further GBP4.4 million in its core projects. This resulted in the Group holding bank balances of GBP1.9 million at the year end. The Group has continued to develop its projects since the year end and will need to access further finances for the coming year.
The Board is in discussion with a number of parties concerning their possible involvement in, and financing of, the Group's East Denver oil and gas prospect. Such third party involvement would provide the Group with the funds necessary to commence drilling at East Denver which should produce short term revenues and cash inflows for the Group. The Board is also considering other financing opportunities, which may involve further shareholder investment as an adjunct or replacement for such third party participation.
The Directors have reviewed the working capital requirements of the Group for the next 12 months and are confident that these can be met. The Directors have a reasonable expectation that further finances will become available during the course of the year through royalties and exploitation income relating to either new or existing agreements and the issue of further shares either through investor placings or the exercise of warrants. The Directors note that whilst there is an uncertainty as to the exact timing and source of these funds, and that the failure to receive sufficient funding from these sources would cast doubt on the Group's ability to continue as a going concern, nonetheless the Directors are cautiously confident that such funds can be obtained.
The Directors consider that the continued adoption of the going concern basis is appropriate and the accounts do not reflect any adjustments that would be required if they were to be prepared on any other basis.
2.4 Business combinations
There were no Business Combinations as defined by IFRS 3 (revised) during the period.
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date.
In arriving at the cost of acquisition, the fair value of the shares issued by the Company is taken to be the mid-market price of those shares at the date of issue. Where this figure exceeds the nominal value of the shares, the excess amount is treated as an addition to the share premium account.
2.5 Revenue recognition
The Group has received no revenue during the period.
The Group's future income could consist of licence fees, milestone and option payments. Income is measured at the fair value of the consideration received or receivable.
Licence fees, option and milestone payments are recognised in full on the date that they are contractually receivable in those circumstances where:
-- the amounts are not refundable;
-- the licencee has unrestricted rights to exploit the technology within the terms set by the licence; and
-- the Group has no further contractual duty to perform any future services.
Where such fees or receipts require future performance or financial commitments on behalf of the Group, the revenue is recognised pro rata to the services or commitments being performed. Funds received that have not been recognised are treated as deferred revenue and recognised in trade and other payables.
Revenues from work or other research and testing carried out for third parties are recognised when the work to which they relate has been performed.
2.6 Foreign currency translation
Highlands Natural Resources' consolidated financial statements are presented in Sterling (GBP), which is also the functional currency of the parent company. The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency).
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the period. When a gain or loss on a non-monetary item is recognised directly in equity, any exchange component of that gain or loss is also recognised directly in equity. When a gain or loss on a non-monetary item is recognised in the income statement, any exchange component of that gain or loss is also recognised in the income statement.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in Sterling using exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognised in equity. Cumulative translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
2.7 Defined contribution pension funds
From time to time the Group may pay contributions related to salary to certain UK employees' individual pension schemes. The pension cost charged against profits represents the amount of the contributions payable to the schemes in respect of the accounting period. No separate provision is made in respect of non-UK employees.
2.8 Investment in subsidiaries
Investment in subsidiaries comprises shares in the subsidiaries stated at cost less provisions for impairment.
2.9 Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial assets can be divided into the following categories: loans and receivables, financial assets at fair value through profit or loss, available-for-sale financial assets and held-to-maturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the instruments were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available.
Derecognition of financial instruments occurs when the rights to receive cash flows from investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Trade receivables
Trade receivables are measured at initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at an effective interest rate computed at initial recognition.
Loans receivable
Loans receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group or Company provides money directly to a debtor with no intention of trading the receivables. Loans receivable are measured at initial recognition at fair value plus, if appropriate, directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. A financial liability is a contractual obligation to either deliver cash or another financial asset to another entity or to exchange a financial asset or financial liability with another entity, including obligations which may be settled by the Group using its equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities
At initial recognition, financial liabilities are measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, all financial liabilities are measured at amortised cost using the effective interest method.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.
2.10 Property, plant and equipment
The Group holds no property assets.
All plant and machinery is stated in the accounts at its cost of acquisition less a provision for depreciation.
Depreciation is charged to write off the cost less estimated residual values of plant and equipment on a straight line basis over their estimated useful lives. Estimated useful lives and residual values are reviewed each year and amended if necessary.
The principle rate of depreciation used is 25% per annum.
2.11 Intangible assets
Patent rights
Intangible assets include acquired intellectual property in the form of patent rights used in oil and gas operations. These assets are stated at cost less amortisation.
Intellectual property rights acquired during the period are capitalised on the basis of the fair value of equity instruments issued to acquire the specific rights.
Costs associated with prosecuting and maintaining these intellectual property rights are treated as an expense in the period in which they are incurred.
Amortisation is applied to write off the cost less residual value of the intangible assets on a straight line basis over their estimated useful life. The principal rate used is 10% per annum.
Exploration and evaluation assets
The Group has acquired numerous leases and mineral rights from third parties on which it has expended further sums in evaluating the assets for technical feasibility and commercial viability. These costs are treated as "exploration and evaluation assets" and are initially recognised at cost, being the purchase cost plus further exploration and evaluation expenditure in accordance with IFRS6.
Subsequent to initial recognition, each asset is assessed for impairment. An impairment provision is made where the carrying value exceeds the assets recoverable amount.
Development costs are excluded from that treatment and are taken directly to the profit and loss account.
2.12 Impairment testing of intangible assets and property, plant and equipment
At each balance sheet date, the Group assesses whether there is any indication that the carrying value of any asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
In the case of goodwill and any intangible asset with either an indefinite useful life or which is not yet ready for use, the Group tests for impairment at each balance sheet date.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management controls the related cash flows.
Individual assets or cash-generating units that include goodwill and other intangible assets with an indefinite useful life, or those not yet available for use, are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use, based on an internal discounted cash flow evaluation. Impairment losses recognised for cash-generating units to which goodwill has been allocated are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit.
2.13 Operating leases
Leases where substantially all the risks and rewards of ownership remain with the lessor are accounted for as operating leases and are accounted for on a straight line basis over the term of the lease and charged to the income statement.
2.14 Equity
Share capital is determined using the nominal value of shares that have been issued.
The Share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from the Share premium account, net of any related income tax benefits.
Equity-settled share-based payments are credited to a Share-based payment reserve as a component of equity until related options or warrants are exercised.
Retained loss includes all current and prior period results as disclosed in the income statement.
2.15 Share-based payments
The Group issued warrants to the initial investors and certain counterparties and advisers in the previous period and has issued share options to its US based staff during the current year.
Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value so determined is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.
Fair value is measured using a Black Scholes pricing model. The key assumptions used in the model have been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
2.16 Taxation
Tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
2.17 Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the entity's accounting policies, management makes estimates and assumptions that have an effect on the amounts recognised in the financial information. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates. The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are those relating to:
-- the ability of the Group to operate as a "going concern"; -- the carrying value of the Group's investment in intellectual property and patent rights; -- the estimation of the fair value of the shares and warrants issued during the period; -- the carrying value of the investment in the subsidiary.
Going concern
As explained in Note 2.3 above, the financial information is drawn up on the going concern basis which assumes that the Group will be able to access sufficient funds to continue to operate for the foreseeable future. The key assumptions are around the forecast of working capital required for, primarily, the exploitation and commercialisation of the Group's exploration and development assets, intellectual property and patent rights and the methods of funding those requirements. The Directors have reviewed the forecasts for the coming 18 months and consider that the Group's existing working capital and sources of finance are adequate for its purposes. If the financial information was to be drawn up on the basis that this assumption was not valid then there could be material changes to the carrying values of both assets and liabilities.
Carrying value of intangible assets
The Group holds certain patent rights together with lease and mining rights, as set out in Note 11 below. The key assumptions concerning the carrying value, or otherwise, for the intangible assets relate to the continuing progress of the Group's exploitation programmes, which are subject to risks common to all oil and gas businesses. These risks include the impact of competition in the specific areas of intellectual property, the potential failure of the projects in development or testing stages and the possible inability to progress projects due to regulatory, manufacturing or intellectual property issues or the lack of available funds or other resources. Furthermore, the crystallisation of any of these risks could have a significant impact on the assessment of the value of the intangible assets. The carrying value is stated at cost incurred, including the fair value of the shares and warrants issued in respect of the acquisition, see below.
Estimation of fair value of warrants and options issued in the period
The fair value of the warrants and options issued during the period have been calculated using a Black Scholes model which requires a number of assumptions and inputs, see Note 19 below.
Carrying value of investment in subsidiary and loan to group undertaking
The Company has invested in and made loans to the subsidiary companies which are not yet profitable or cash generative. The Company has made provision against the loans made to the subsidiaries equivalent to the full amount of the loan, which is repayable within one year. No provision has been made against the investment or possible future costs or losses of the subsidiaries, see Note 12 below.
2.18 Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group
During the financial year, the Group has adopted the following new IFRSs (including amendments thereto) and IFRIC interpretations that became effective for the first time.
Standard Effective
date, annual
period beginning
on or after
Annual Improvements 2012-2014 cycle 1 January
2016
IFRS 11 (amendments) Accounting for 1 January
acquisitions of interests in joint 2016
operations
IFRS 14 Regulatory Deferral accounts 1 January
2016**
Amendments to IFRS 10, IFRS 12 and 1 January
IAS 28 Investment entities - Applying 2016
the Consolidation Exception
IAS 16 Property, Plant & Equipment 1 January
and IAS 38 - Intangible assets (amendments) 2016
IAS 16 Property, Plant & Equipment 1 January
and IAS 41 - Bearer Plants (amendments) 2016
IAS 1 Disclosure Initiative 1 January
2016
IAS 27 (amendments) Equity Method 1 January
in Separate Financial Statements 2016
**The European commission has decided not to launch the endorsement process of this interim standard but to wait for the final standard.
Their adoption has not had any material impact on the disclosures or amounts reported in the financial statements.
At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Group and which have not been applied in these financial statements, were in issue but which were not yet effective. In some cases these standards and guidance have not been endorsed for use in the European Union.
Effective
date, annual
Standard period
beginning
on or after
Annual improvements 2014-2016 cycle 1 January
2017/ 1
January
2018
Amendment to IAS 12 - Recognition 1 January
of Deferred Tax for unrealised losses 2017
Amendment to IAS 7 - Disclosure Initiative 1 January
2017
IFRS 9 Financial instruments 1 January
2018
IFRS 15 Revenue from contracts with
Customers including amendments to 1 January
IFRS 15: Effective date of IFRS 15 2018
Clarification to IFRS 15 Revenue 1 January
from contracts with customers 2018
IFRS 16 Leases 1 January
2019
IFRS 2 (amendments) Classification 1 January
and Measurement of Share-based Payment 2018
Transactions
IFRIC Interpretation 22 Foreign Currency 1 January
Transactions and Advance Consideration 2018
The Directors are evaluating the impact that these standards will have on the financial statements of the Group.
2.19 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, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as Robert Price.
All operations and information are reviewed together so that at present there is only one reportable operating segment.
3. REVENUE
There was no revenue generated in the period.
4. SEGMENT REPORTING
In the opinion of the Directors, during the period ended 31 March 2017 the Group only operated in the single business segment of oil and gas development.
5. OPERATING LOSS 2017 2016
GBP GBP
This is stated after
charging
Depreciation of property, 2,139 -
plant and equipment
Amortisation of intangible
assets 83,611 59,915
Share-based payments
charge 220,448 636,427
Rent payable under operating 66,810 -
lease
Auditors' remuneration
- audit of parent company 44,750 25,000
- non-audit services
audit-related assurance
services 2,750 2,500
taxation compliance services 2,175 -
other taxation services 2,625 -
corporate finance services 12,500 28,750
Directors'remuneration 252,287 617,357
Staff costs (including
Directors) 605,264 106,897
6. DIRECTORS AND STAFF COSTS
During the year the Group recruited staff
into its US based companies. The staff costs
for the Group, for the year, including Directors,
were:
2017 2016
GBP GBP
Salaries 523,564 60,969
Social Security costs 41,126 -
Healthcare costs 40,574 20,928
Pension contributions - 25,000
605,264 106,897
Charge in respect of
Share-based payments 220,448 510,460
825,712 617,357
-------- --------------------
The average number of staff during the year,
including Directors, was 6 (2016: 2).
The Directors consider that there are no
key management personnel other than the Directors.
Management remuneration paid and other benefits
supplied to the Directors during the period
was as follows:
2017 2016
GBP GBP
Salary 208,555 60,969
Healthcare costs 29,957 20,928
Social Security costs 13,775 -
Pension contribution to defined
contribution scheme
(1 Director) - 25,000
252,287 106,897
Charge in respect of share-based
payments - 510,460
252,287 617,357
--------- -------------------
The amounts set out above
include remuneration to the
highest paid director as
follows:
Salary 150,222 60,969
Healthcare costs 29,957 20,928
180,179 81,897
Charge in respect of share-based
payments - 489,250
180,179 571,147
--------- -------------------
7. FINANCE INCOME 2017 2016
GBP GBP
The finance income comprises:
Bank interest receivable 477 1,378
477 1,378
----- ------
8. TAXATION 2017 2016
GBP GBP
The charge/credit for the
period is made up as follows:
Corporate Taxation on the
results for the period
UK - -
Non-UK - -
Taxation charge/credit for - -
the period
------------- ------------
A reconciliation of the tax
charge/credit appearing in
the income statement to the
tax credit that would result
from applying the standard
rate of tax to the results
for the period is:
Loss per accounts (3,369,272) (1,816,671)
------------- ------------
Tax credit at the standard
rate of corporation
tax in the UK (20%): (673,854) (363,334)
Impact of costs disallowable
for tax purposes 73,228 134,294
Deferred tax in respect of - -
temporary differences
Impact of unrelieved tax
losses carried forward 600,626 229,040
Taxation credit for the period - -
------------- ------------
Estimated tax losses of GBP4,000,000 (2016:
GBP1,145,000) are available for relief against
future profits.
The deferred tax asset not provided for
in the accounts based on the estimated tax
losses and the treatment of the equity settled
share based payments, net of any other temporary
differences, is approximately GBP800,000
(2016: GBP117,000).
9. LOSS PER SHARE
The calculation of the loss per share is based on the loss for the financial period after taxation of GBP3,369,272 (2016: loss GBP1,816,671) and on the weighted average of 50,391,294 (2016: 16,690,632) ordinary shares in issue during the period.
The options outstanding at 31 March 2017 and 31 March 2016 are considered to be non-dilutive in that their conversion into ordinary shares would not increase the net loss per share. Consequently, there is no diluted loss per share to report for the period.
10 TANGIBLE ASSETS
Group Plant
and equipment
GBP
Cost
At Incorporation and -
31 March 2016
Additions 11,876
At 31 March 2017 11,876
---------------
Amortisation
At Incorporation and -
31 March 2016
Charge for the period 2,139
At 31 March 2017 2,139
---------------
Net book value
At 31 March 2016 -
---------------
At 31 March 2017 9,737
---------------
11. INTANGIBLE ASSETS
Group Patent Exploration Total
Rights & evaluation
assets
GBP GBP GBP
Cost
At 31 March 2016 706,500 35,945 742,445
Additions - 4,403,039 4,403,039
At 31 March 2017 706,500 4,438,984 5,145,484
-------- ------------- ----------
Amortisation and
impairment
At 31 March 2016 58,875 1,040 59,915
Charge for the period 70,650 12,961 83,611
At 31 March 2017 129,525 14,001 143,526
-------- ------------- ----------
Net book value
At 31 March 2016 647,625 34,905 682,530
-------- ------------- ----------
At 31 March 2017 576,975 4,424,983 5,001,958
-------- ------------- ----------
Patent Exploration Total
Rights & evaluation
assets
GBP GBP GBP
Cost
At Incorporation - - -
Additions 706,500 35,945 742,445
At 31 March 2016 706,500 35,945 742,445
-------- ------------- ----------
Amortisation and
impairment
At Incorporation - - -
Charge for the period 58,875 1,040 59,915
At 31 March 2016 58,875 1,040 59,915
-------- ------------- ----------
Net book value
At Incorporation - - -
-------- ------------- ----------
At 31 March 2016 647,625 34,905 682,530
-------- ------------- ----------
Company Patent
Rights
GBP
Cost
At 31 March 2016 706,500
Additions -
At 31 March 2017 706,500
--------
Amortisation
At 31 March 2016 58,875
Charge for the period 70,650
At 31 March 2017 129,525
--------
Net book value
At 31 March 2016 647,625
--------
At 31 March 2017 576,975
--------
Patent
Rights
GBP
Cost
At Incorporation -
Additions 706,500
At 31 March 2016 706,500
--------
Amortisation
At Incorporation -
Charge for the period 58,875
At 31 March 2016 58,875
--------
Net book value
At Incorporation -
--------
At 31 March 2016 647,625
--------
The patent rights included above have finite useful lives estimated to be of 10 years from date of initial acquisition, over which period the assets are amortised.
The Group tests for possible impairment of definite-lived intangible assets on a regular basis. If indicators of possible impairment exist, such as a change of use of the asset, a reduction in operating cash flow or a change in technology, the Group compares the discounted cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the discounted cash flow amount, an impairment charge is recorded for the amount necessary to reduce the carrying value of the asset to fair value. Fair value for the purpose of the impairment tests is determined based on current market value or discounted future cash flows. In determining the fair value, certain assumptions are made concerning, for example, estimated cash flow and growth of the Group's operations.
12. INVESTMENT IN SUBSIDIARY
AND LOAN TO GROUP
UNDERTAKING
2017 2016
Company GBP GBP
Investment in subsidiary 8,108,904 66
---------- -----
Subsidiary Companies:
The Company has three subsidiaries whose principal activity is oil and gas development. All Subsidiary companies are consolidated in the Group's financial statements.
Place Proportion Loss Aggregate
Name of incorporation of ownership for the capital
and operation interest year and reserves
at 31
March
2017
Highlands Natural USA 100% GBP2,205,862 GBP4,957,147
Resources
Corporation
Highlands Montana USA 100%* GBP458,720 GBP(492,877)
Corporation*
Highlands Helium
Developments Ltd UK 100% GBPnil GBP100
(dormant)
*Owned by Highlands Natural Resources Corporation
The registered offices of the two USA based subsidiaries are at 2401 East 2(nd) Avenue, Suite 150, Denver, Colorado 80206, USA.
The registered office of Highlands Helium Developments Ltd is 9 Limes Road, Beckenham, Kent BR3 6NS, England.
The ownership in all cases is of 100% of the issued ordinary shares of each company and in all cases represents 100% of the voting rights.
During the year the Company established a second US based subsidiary to develop the Group's helium project and made further investment in, and loans to, its USA based operating subsidiary Highlands Natural Resources Corporation to fund all the US operations. The loans are repayable upon demand and the parent company has made an impairment provision against the loan balances as at the year end to the extent that the subsidiary companies have insufficient available bank resources to repay the loans if requested without requiring further advances.
The investments in the shares of the subsidiaries are long term holdings and supported by the underlying assets of the subsidiaries. In the Board's opinion, those assets and their future potential are such that no impairment provision is required against the carrying value of the investments in the subsidiaries.
Loan to group undertaking Loan Impairment Net
at cost Provision Total
GBP GBP GBP
At 31 March 2016 807,772 569,216 238,556
Additions 8,764,001 893,719 7,870,282
Converted to capital
in year (8,108,838) - (8,108,838)
At 31 March 2017 1,462,935 1,462,935 -
------------ ----------- ------------
13. TRADE & OTHER Group Company Group Company
RECEIVABLES
2017 2017 2016 2016
GBP GBP GBP GBP
Trade receivables 30,628 - - -
Other receivables 21,224 8,427 41,634 41,634
Prepayments
& other
debtors 332,975 30,632 5,682 5,682
384,827 39,059 47,316 47,316
---------- --------- -------- --------
Prepayments & other debtors includes GBP302,342 (2016: nil) which is receivable in more than one year.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Fair values have been calculated by discounting cash flows at prevailing interest rates. See also Note 24.
14. CASH & Group Company Group Company
CASH EQUIVALENTS
2017 2017 2016 2016
GBP GBP GBP GBP
Cash at bank 1,934,486 671,235 417,427 202,428
Cash held at
brokers - - 300,000 300,000
1,934,486 671,235 717,427 502,428
---------- -------- -------- --------
Cash at bank comprises of balances held by the Group in current bank accounts. The carrying amount of these assets approximates to their fair value. The cash held at brokers was held in an instantly accessible account.
15. TRADE & OTHER Group Company Group Company
PAYABLES
2017 2017 2016 2016
GBP GBP GBP GBP
Trade payables 185,870 166,184 - -
Accruals &
other payables 136,466 40,000 53,348 42,000
322,336 206,184 53,348 42,000
-------- -------- ------- --------
Trade payables and accruals principally comprise amounts outstanding for trade purchases and continuing costs. The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Fair values have been calculated by discounting cash flows at prevailing interest rates. See also Note 24.
16. DEFERRED TAXATION
No deferred tax asset has been recognised by the Group due to the uncertainty of generating sufficient future profits and tax liability against which to offset the tax losses. Although current tax rates in the USA are higher than in the UK, due to the uncertainty of timing of any available relief and the Corporation tax rates that would be applicable at that time in either the UK or the USA, where the Group's operations principally occur, the Directors have assumed that the applicable tax rate will be the same as the current tax rate applicable in the UK of 20%. Note 8 above sets out the estimated tax losses carried forward and the impact of the deferred tax asset not accounted for.
17. SHARE CAPITAL 2017 2016
GBP GBP
Allotted called up and fully
paid:
67,787,349 (2016: 29,823,500)
ordinary 5p shares 3,389,367 1,491,175
---------- ----------
The Company has only one class of share. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends and repayment of capital.
Number Par value
of shares
issued
GBP
At 31 March 2016 29,823,500 1,491,175
6 May 2016 Issue of shares upon
exercise of warrants at 10p 370,000 18,500
6 May 2016 Issue of shares upon
exercise of warrants at 5p 150,000 7,500
10 May 2016 Issue of shares upon
exercise of warrants at 10p 430,000 21,500
10 May 2016 Issue of shares upon
exercise of warrants at 5p 40,000 2,000
10 May 2016 Placing of shares
at 18p 2,883,849 144,192
18 May 2016 Issue of shares upon
exercise of warrants at 10p 80,000 4,000
25 May 2016 Issue of shares upon
exercise of warrants at 10p 100,000 5,000
3 June 2016 Issue of shares upon
exercise of warrants at 10p 50,000 2,500
20 June 2016 Issue of shares upon
exercise of warrants at 10p 50,000 2,500
21 June 2016 Issue of shares upon
exercise of warrants at 10p 100,000 5,000
25 June 2016 Issue of shares upon
exercise of warrants at 5p 10,000 500
1 July 2016 Issue of shares upon
exercise of warrants at 25p 5,000,000 250,000
7 July 2016 Issue of shares upon
exercise of warrants at 10p 50,000 2,500
27 July 2016 Issue of shares upon
exercise of warrants at 10p 100,000 5,000
2 September 2016 Issue of shares
upon exercise of warrants at 25p 5,000,000 250,000
15 September 2016 Issue of shares
upon exercise of warrants at 25p 5,000,000 250,000
15 September 2016 Issue of shares
upon exercise of warrants at 10p 50,000 2,500
21 September 2016 Issue of shares
upon exercise of warrants at 25p 5,000,000 250,000
19 October 2016 Issue of shares
upon exercise of warrants at 25p 10,000,000 500,000
17 March 2017 Issue of shares
in settlement of liability at
25.8p per share 3,500,000 175,000
Total issued in the period 37,963,849 1,898,192
------------ -----------
Number of shares in issue at 31
March 2017 67,787,349 3,389,367
------------ -----------
At 31 March 2017 there were warrants and options outstanding over 31,470,000 unissued ordinary shares (2016: 61,600,000).
Details of the options and warrants outstanding are as follows:
Issued Exercisable Exercisable Number Exercise
from until Outstanding price
(p)
Warrants
25 March Any time
2015 until 24 March 2020 27,800,000 5
25 March Any time
2015 until 24 March 2018 720,000 10
3 February 3 August 3 February
2016 2016 2019 1,500,000 25
-------------
30,020,000
-------------
Issued Exercisable Exercisable Number Exercise
from until Outstanding price
(p)
Options
1 October Any time 30 September
2016 until 2026 1,000,000 32.75
12 October Any time 11 October
2016 until 2026 250,000 27.75
7 January Any time
2017 until 6 January 2027 200,000 31.50
-------------
1,450,000
-------------
Total 31,470,000
-------------
The Directors held the following warrants at the beginning and end of the period:
Director At 31 Granted At 31 Exercise Earliest Latest
March in the March price date date
2016 period 2016 of exercise of exercise
Pence
R B Price 23,750,000 - 23,750,000 5p 25/03/15 24/03/20
J M Davies 1,000,000 - 1,000,000 5p 25/03/15 24/03/20
100,000 - 100,000 10p 25/03/15 24/03/18
Total 24,850,000 - 24,850,000
----------- -------- -----------
The market price of the shares at the year end was 27.0p per share.
During the year, the minimum and maximum prices were 11.0p and 68.125 per share respectively.
18. Share premium account
2017
GBP
At 31 March 2016 643,575
6 May 2016 Issue of shares upon exercise
of warrants at 10p 18,500
10 May 2016 Issue of shares upon exercise
of warrants at 10p 21,500
10 May 2016 Placing of shares at 18p 374,901
18 May 2016 Issue of shares upon exercise
of warrants at 10p 4,000
25 May 2016 Issue of shares upon exercise
of warrants at 10p 5,000
3 June 2016 Issue of shares upon exercise
of warrants at 10p 2,500
20 June 2016 Issue of shares upon
exercise of warrants at 10p 2,500
21 June 2016 Issue of shares upon
exercise of warrants at 10p 5,000
1 July 2016 Issue of shares upon exercise
of warrants at 25p 1,000,000
7 July 2016 Issue of shares upon exercise
of warrants at 10p 2,500
27 July 2016 Issue of shares upon
exercise of warrants at 10p 5,000
2 September 2016 Issue of shares upon
exercise of warrants at 25p 1,000,000
15 September 2016 Issue of shares
upon exercise of warrants at 25p 1,000,000
15 September 2016 Issue of shares
upon exercise of warrants at 10p 2,500
21 September 2016 Issue of shares
upon exercise of warrants at 25p 1,000,000
19 October 2016 Issue of shares upon
exercise of warrants at 25p 2,000,000
17 March 2017 Issue of shares in settlement
of liability at 25.8p per share 728,101
----------
7,815,577
Less: costs relating to share issues (175,955)
----------
At 31 March 2017 7,639,622
----------
19. EQUITY-SETTLED SHARE-BASED PAYMENTS RESERVE
2017 2016
GBP GBP
At 31 March 2016 1,077,582 -
On options and warrants granted
in the year 220,448 1,086,427
Released on exercise of warrants
during the year (464,698) (8,845)
At 31 March 2017 833,332 1,077,582
------------ ----------
The Company has issued warrants to investors, counterparties and advisers during the previous period and has granted share options to its US based staff during the current year. The details of the exercise price and exercise period are given in Note 17 above.
Details of the options and warrants outstanding at the period end are as follows:
2017 2017 2016 2016
Options and Number Weighted Number Weighted
Warrants average average
exercise exercise
price price -
- pence pence
Outstanding
at the beginning
of the period 61,600,000 15.40p - -
Granted during
the period 1,450,000 31.72p 63,050,000 15.27p
Lapsed during - - - -
the period
Exercised during
the period (31,580,000) 24.22p (1,450,000) 10.00p
------------- ------------
Outstanding
at the period
end 31,470,000 7.30p 61,600,000 15.40p
------------- ------------
Exercisable
at the period
end 31,470,000 7.30p 60,100,000 15.16p
------------- ------------
There were no options exercised during the year. The warrants were exercised on a number of dates between 6 May 2016 when the share price was 37.0p and 19 October 2016 when the share price was 33.625p. During that period the share price fluctuated to as low as 18.375p and as high as 68.125p.
The options and warrants outstanding at the period end have a weighted average remaining contractual life of 3.2 years. The exercise price of the options and warrants outstanding at the period end range from 5p to 32.75p per share. Full details of the exercise price and potential exercise dates are given in Note 17 above.
There were no warrants granted during the year. The fair values of options granted during the period were calculated using a Black Scholes pricing model and the inputs into the model were as follows:
Share price at date of 27.75
issue of warrants - 32.75p
Exercise price 27.75
- 32.75p
Expected volatility 53.8 -
56.8%
Risk free rate 0.37 -
0.66%
Expected dividend yield Nil
The expected volatility has been arrived at through a calculation of the volatility of the share price from re-admission of the shares on 3 February 2016 and comparison with the volatility of share price of similar companies.
The Group recognised total charges of GBP220,448 related to equity-settled share-based payment transactions during the period.
20. FOREIGN CURRENCY TRANSLATION RESERVE
2017 2016
GBP GBP
Balance at start of period (10,581) -
Movement in the year (130,668) (10,581)
At 31 March 2017 (141,249) (10,581)
---------- ---------
21. CAPITAL COMMITMENTS
There were no capital commitments at 31 March 2017 or 31 March 2016.
22. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2017 or 31 March 2016.
23. COMMITMENTS UNDER OPERATING LEASES
At 31 March 2017, the Group had an operating lease commitment on its US premises of GBP94,875 per annum, approximately, (2016: nil). The total commitment under this operating lease which runs out in 2 - 5 years is GBP452,582.
24. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group's financial instruments comprise primarily cash and various items such as trade debtors and trade creditors which arise directly from its operations. The main purpose of these financial instruments is to provide working capital for the Group's operations. The Group does not utilise complex financial instruments or hedging mechanisms in respect of its non-sterling operations.
Financial assets by category
The categories of financial assets (as defined by International Accounting Standard 39: Financial Instruments: Recognition and Measurement) included in the balance sheet and the heading in which they are included are as follows:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
Non current assets
Loan to group
undertaking - - - 238,556
Current assets
Trade and other
receivables 384,427 39,059 47,316 47,316
Cash and cash
equivalents 1,934,486 671,235 717,427 502,428
2,318,913 1,952,781 764,743 788,300
---------- ---------- -------- --------
The loan to group undertaking has no fixed repayment date although it is not repayable within twelve months and its future repayment will depend upon the financial performance of the subsidiary.
All other amounts are short term and none are past due at the reporting date.
Financial liabilities by category
The categories of financial liabilities (as defined by IAS39) included in the balance sheet and the heading in which they are included are as follows:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
Current liabilities
Trade and other payables 332,336 206,184 53,348 42,000
Categorised as financial
liabilities
measured at amortised
cost 332,336 206,184 53,348 42,000
---------- ---------- --------- ---------
All amounts are short term and payable in 0 to 3 months.
Credit risk
The maximum exposure to credit risk at the reporting date by class of financial asset was:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
Trade and other receivables 108,698 30,632 41,634 41,634
-------- -------- ------- --------
Capital management
The Group considers its capital to be equal to the sum of its total equity. The Group monitors its capital using a number of key performance indicators including cash flow projections, working capital ratios, the cost to achieve development milestones and potential revenue from partnerships and ongoing licensing activities. The Group's objective when managing its capital is to ensure it obtains sufficient funding for continuing as a going concern. The Group funds its capital requirements through the issue of new shares to investors.
Interest rate risk
The maximum exposure to interest rate risk at the reporting date by class of financial asset was:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
Bank balances and
receivables 1,934,486 671,235 759,061 544,062
---------- -------- -------- --------
The nature of the Group's activities and the basis of funding are such that the Group has significant liquid resources. The Group uses these resources to meet the cost of future development activities. Consequently, it seeks to minimise risk in the holding of its bank deposits while maintaining a small rate of interest during this period of very low interest rates. The Group is not financially dependent on the income earned on these resources and therefore the risk of interest rate fluctuations is not significant to the business and the Directors have not performed a detailed sensitivity analysis. Nonetheless, the Directors take steps to secure rates of interest which generate a return for the Group by depositing sums which are not required to meet the immediate needs of the Group in interest-bearing deposits. Other balances are held in interest-bearing, instant access accounts. All deposits are placed with main clearing banks to restrict both credit risk and liquidity risk. The deposits are placed for the short term, between one and three months, to provide flexibility and access to the funds and to avoid locking into potentially unattractive interest rates.
Credit and liquidity risk
Credit risk is managed on a Group basis. Funds are deposited with financial institutions with a credit rating equivalent to, or above, the main UK clearing banks. The Group's liquid resources are invested having regard to the timing of payments to be made in the ordinary course of the Group's activities. All financial liabilities are payable in the short term (between 0 and 3 months) and the Group maintains adequate bank balances to meet those liabilities as they fall due.
Currency risk
The Group operates in a global market with income possibly arising in a number of different currencies, principally in Sterling or US Dollars. The majority of the operating costs are incurred in Sterling with the rest predominantly in US Dollars. The Group does not hedge potential future income or costs, since the existence, quantum and timing of such transactions cannot be accurately predicted.
Financial assets and liabilities denominated in US Dollars and translated into Sterling at the closing rate were:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
Financial assets 1,732,181 1,462,935 214,999 238,556
Financial liabilities 239,314 - 11,348 -
Net financial assets 1,492,867 1,462,935 203,651 238,556
---------- ---------- -------- --------
The following table illustrates the sensitivity of the net result for the period and the reported financial assets of the Group in regards to the exchange rate for Sterling:US Dollar
2017
As reported if Sterling if Sterling
rose fell 20%
20%
GBP GBP GBP
Group result for the
period (3,089,245) (2,862,234) (3,362,887)
US Dollar denominated
net financial assets 4,464,652 3,720,543 5,580,814
Total equity at 31
March 2017 7,008,672 6,020,741 8,490,568
25. RELATED PARTY TRANSACTIONS
During the period Diversion Technologies LLC, of which R B Price is a director and shareholder (see below), disposed of their entire holding of warrants in the Group which were subsequently exercised by the new owner. The issue of the relevant shares generated GBP7.5m in new funds for the Group.
During the period, the Group paid costs of GBP109,072 in respect of the prosecution of the patent rights held in conjunction with Diversion Technologies LLC and recharged 25% of those costs to that company under the terms of the acquisition agreement.
Between the date of incorporation and 31 March 2016, the Company entered into the following related party transactions:
As part of the formation and initial equity placing of the Company, 12,200,000 Ordinary Shares of 5p each were subscribed for and issued to the following Directors:
Number Cash subscribed
(GBP per share)
R B Price 12,000,000 0.05
J M Davies 200,000 0.05
On 18 March 2015, the Company constituted Founder Warrants on the terms of an instrument under which the Company issued Warrants in respect of 23,750,000 shares to R B Price and in respect of 1,000,000 shares to J M Davies. The Warrants entitle the holders to subscribe for 23,750,000 and 1,000,000 Ordinary Shares respectively at 5 pence per Ordinary Share. The Warrants are exercisable at any time up to and including the 25 March 2020.
R B Price (a Director of the Company) is also a director of and 37.5% shareholder in Diversion Technologies LLC ("Diversion"). During the period, the Group acquired a 75% stake in intellectual property and patent rights owned by Diversion for GBP706,500 which the Group paid by the issue of 1,900,000 Ordinary Shares to Diversion along with the granting to Diversion of warrants over a further 30,000,000 Ordinary Shares exercisable within three years at an exercise price of 25p per share. At the time of the acquisition the shares in the Company were trading at 13.5p per share.
26. EVENTS AFTER THE REPORTING PERIOD
Since the reporting period the Company has issued a further 50,000 ordinary shares upon the exercise of warrants at a price of 10p per share.
27. CONTROL
In the opinion of the Directors there is no single ultimate controlling party.
**ENDS**
For further information, please visit www.highlandsnr.com, or contact:
Highlands Natural +1 (0) 303 322
Robert Price Resources plc 1066
Cenkos Securities +44 (0) 131 220
Nick Tulloch plc 9772
+44 (0) 131 220
9771 /
Cenkos Securities +44 (0) 207 397
Neil McDonald plc 1953
St Brides Partners +44 (0) 20 7236
Lottie Brocklehurst Ltd 1177
St Brides Partners +44 (0) 20 7236
Sean Davies Ltd 1177
Notes to Editors
Highlands (LSE: HNR.L) is a London-listed natural resources company with a portfolio of high-potential oil, gas and helium assets and technologies. The company's core projects include:
-- East Denver Niobrara: a farm-in opportunity for horizontal oil and gas wells targeting the Niobrara shale formation in a well-studied area of the Denver Julesburg Basin.
-- DT Ultravert: a re-fracking and parent well protection technology with 20 patents pending in the United States and internationally. Highlands is advancing commercial conversations with a range of oil and gas operators to create revenue-sharing opportunities for DT Ultravert applications.
-- Helios Two: a 105,000+ acre helium and natural gas prospect in SE Montana with drilling and assessment operations ongoing.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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