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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Prospex Oil And Gas Plc | LSE:PXOG | London | Ordinary Share | GB00BMFZVZ53 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.525 | 1.30 | 1.75 | 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
TIDMPXOG
RNS Number : 9732D
Prospex Oil and Gas PLC
03 May 2017
Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil and Gas
3 May 2017
Prospex Oil and Gas Plc ('Prospex' or the 'Company')
Final Results
Prospex Oil and Gas Plc, the AIM quoted investment company, announces its final results for the year ended 31 December 2016.
Highlights:
-- Delivering on strategy to build a leading oil and gas investment company focused on high impact European opportunities with short timelines to production
-- Acquired 49% stake in Hutton Poland, which owns 100% of the 1,150 sq km Kolo Licence, onshore Poland
-- US$4.8m (GBP3.9m) valuation assigned to investment in Hutton Poland as at the year end (based on the competent person's report dated May 2016, although see Note 20 on Investment Valuation) - compares to overall cost of investment including Prospex's share of dry hole drilling costs of approximately GBP1.6m.
-- Identified a number of prospective targets on the Kolo licence, including the Boleslaw Prospect which was drilled in Q4 2016
-- Strong cash position of GBP0.4m - GBP2.52m raised during the period and GBP0.85 post
-- Continued focus on corporate overheads to ensure as much of the Company's funds as possible are invested in value adding activities
-- Evaluating multiple investment opportunities that meet management's investment criteria
Edward Dawson, Managing Director of Prospex, said, "Prospex is led by a management team focused on replicating the success it has had in generating value within the oil and gas sector. We have a tried and tested strategy of identifying and acquiring overlooked assets; using advanced technologies and techniques to define new prospects; and taking part in well executed drilling operations. The key is investing in the right assets on the right terms in proven and accommodating hydrocarbon jurisdictions. We are currently assessing a number of highly prospective projects which fit this bill and are hopeful that we will secure at least one of these in time to deliver on our target to drill a well later this year."
The Financial Results for the year ended 31 December 2016 ("Accounts"), as set out below, are available to download on the Company's website together with the Notice of AGM ("AGM Notice"). The Accounts (which includes the Directors' Report) and AGM Notice will be posted to shareholders on or around 5 May 2017.
For further information visit www.prospexoilandgas.com or contact the following:
Hot Features
Premium
Edward Dawson Prospex Oil and Gas Plc Tel: +44 (0) 20 3586
1009
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Jack Botros
Jon Belliss Beaufort Securities Limited Tel: +44 (0) 20 7382
8300
Lucy Williams Peterhouse Corporate Finance Tel: +44 (0) 20 7469
Charles Goodfellow 0932
Eran Zucker
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
Charlotte Page 1177
Chairman's Statement
The year under review serves to demonstrate management's ability to deliver the strategy that has been put in place to transform Prospex into a leading multi-project oil and gas investment company. It was an active year which started with us securing our first investment, fulfilling our investment policy, and culminated in the drilling of a low cost well on schedule and on budget. While the end result of the well was not what we had hoped for, the steps we took and the short period of time during which they were taken provide a template for how we intend to build this company.
Our strategy is to acquire a portfolio of investments in oil and gas projects that are at various stages of the development cycle and which represent highly attractive opportunities on a risk / reward basis. At the beginning of the review period the Company made its first investment under the new strategy: the acquisition for GBP32,000 in respect of a 49% interest in Hutton Poland Limited's share capital and GBP588,000 for a similar interest in its loan capital, which holds the Kolo licence onshore Poland. By the year end the Company had invested almost GBP1.6m. Prior to completion of the acquisition in April 2016, we had set about undertaking a detailed re-evaluation of the prospectivity on the licence by applying our expertise to re-work existing data. This work resulted in the identification of a conventional gas prospect, Boleslaw, as well as a deeper oil play. AGR TRACS ('AGR') were then commissioned as a Competent Person to scrutinise our work and provide an independent assessment. In their report, AGR described Boleslaw as "a worthwhile and attractive exploration opportunity". Utilising this assessment, the Company's interest in Hutton Poland was valued at US$4.8m (GBP3.9m) in the financial statements as at 31 December 2016 (but see Note 20 on Investment Valuation).
Having established Boleslaw as a drill ready prospect the necessary permits to drill a low cost well were obtained by Hutton Poland. Drilling operations commenced at the Boleslaw-1 well on time in December 2016. For a discovery to be made a number of factors need to be in place: source rock; reservoir; trap; and migration. Unfortunately, in the case of Boleslaw not all of these were present. As with all oil and gas exploration there is only so much that can be done to de-risk a prospect prior to drilling. Only success with the drillbit proves up prospects. As a result, when risks are assigned to drill-ready prospects these are typically between 1 in 5 and 1 in 3. Boleslaw was a low cost well and based on our own technical work and that of our competent person it represented an attractive drilling opportunity on a risk / reward basis.
Prospect's interest in the Kolo licence was not exclusive to the Boleslaw prospect. The Company believes additional prospectivity exists on the licence, including a deeper oil lead. Importantly the result of the Boleslaw-1 well has no bearing on this potential oil play. The well has validated elements of the deeper target's geological model and we are currently evaluating all the well data and updating the geological interpretation to ascertain the best way forward for the licence.
Hutton Poland is just the first of what we believe will be many investments under our investment strategy. We have an active pipeline of potential opportunities, which we believe offer near term value uplift in line with our strategy. With this in mind, we are closely evaluating a number of projects which match our criteria: located in proven hydrocarbon jurisdictions; scope for multiple value trigger events within a short time frame; located close to market; and available to be acquired on attractive terms. Furthermore, thanks, in part, to our team's proven track record of generating value in the oil and gas sector, people are approaching us with their projects. We find many of these investment opportunities to be technically interesting and we are confident that new investments will be added to our portfolio in due course.
Once new projects have been secured, we will endeavour to move rapidly through the various development milestones with the aim of reaching a value trigger event such as drilling at the earliest opportunity, as we did with Boleslaw. We are able to do this because we have ensured that Prospex has a strong capital base, that corporate overheads are kept to a reasonable level and that monthly cash burn is low. This allows us to invest as much of our available funds as possible into our portfolio.
As announced on 28 March 2017, the Company wishes to amend its investment policy to remove the paragraph stating that the Company will undertake an acquisition or acquisitions within the natural resources and/or energy sector, which would likely constitute a reverse takeover under AIM Rule 14 of the AIM Rules for Companies, within 12 months of the date of that 11 May 2016 GM. A resolution proposing this amendment will be put to shareholders at the Company's AGM to be held on 1 June 2017 and is set out in the AGM Notice. Shareholders should note that the Board is actively evaluating a number of possible investments, any of which would add to its portfolio.
Outlook
Whether it was successful or not, Boleslaw was always going to be the first of many wells in which the Company invests. We are working hard to secure additional projects on attractive terms for our shareholders, where we can apply our technical expertise to generate or review drill-ready prospects and leads. Boleslaw was a potential company-maker. Our aim is to build a portfolio of high impact prospects that are based on first class technical work, which have been rigorously scrutinised by respected third parties, have an attractive risk / reward trade off, and can be inexpensively drilled within short time frames. With this in mind, we have been closely evaluating a number of exciting opportunities and remain confident that we will invest in at least one of these in the near term. Our target is to participate in further drilling activity this year, as we look to deliver on our objective and generate value for all our shareholders.
I look forward to providing further updates on our progress in due course. In the meantime, I would like to take this opportunity to thank our shareholders for their support of the Company and team.
Bill Smith
Non-Executive Chairman
* *S * *
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2016
2016 2015
Notes GBP GBP
Continuing operations
Administrative expenses (778,093) (601,892)
---------------- ----------------
Operating loss 4 (778,093) (601,892)
Surplus as a result of the CVA - 98,885
---------------- ----------------
(778,093) (503,007)
Finance income 5 - 162
Financial assets at fair
value through profit
and loss 9 2,345,557 -
---------------- ----------------
Profit/(loss) before
income taxation 1,567,464 (502,845)
Income tax expense 6 - 411
---------------- ----------------
Profit/(loss) on ordinary
activities after taxation
from continuing operations 1,567,464 (502,434)
Discontinued operations
Profit/(loss) for the
year from discontinued
operations - 571,745
---------------- ----------------
Profit for the year and
total comprehensive income
attributable to owners
of the parent 1,567,464 69,311
Earnings/(loss) per share
- basic and diluted 7
From continuing operations 0.96p (1.64)p
From discontinued operations - 1.86p
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
2016 2015
Notes GBP GBP
ASSETS
Non current assets
Tangible assets 8 849 1,274
Investments 9 4,142,200 100
------------------ ------------------
4,143,049 1,374
Current assets
Trade and other
receivables 10 31,766 155,909
Cash and cash
equivalents 11 466,413 382,216
------------------ ------------------
498,179 538,125
LIABILITIES
Current liabilities
Trade and other
payables 12 (87,676) (80,975)
------------------ ------------------
Net current assets 410,503 457,150
------------------ ------------------
Net assets 4,553,552 458,524
EQUITY
Share capital 15 5,107,779 2,657,234
Share premium account 6,740,144 6,732,714
Capital redemption reserve 43,333 43,333
Merger reserve 2,416,667 2,416,667
Profit and loss account (9,754,371) (11,391,424)
------------------ ------------------
Total equity 4,553,552 458,524
Approved by the Board and authorised for issue on .........................
..........................
.... ..............................
Edward Dawson Richard Mays
Director Director
Company Registration No. 03896382
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2016
-
Foreign Capital
Share Share Retained currency redemption Merger Non controlling Convertible
capital premium earnings reserve reserve reserve interests loan note Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1 January
2015 2,304,398 6,063,208 (11,531,728) 39,467 43,333 2,416,667 (166,865) 100,216 (731,304)
Changes in equity for 2015
Total comprehensive
income
for the year - - 69,311 - - - - - 69,311
Issue of shares 352,836 723,314 - - - - - - 1,076,150
Costs in
respect of
shares
issued - (53,808) - - - - - - (53,808)
On completion of CVA - - - - - - - (100,216) (100,216)
Equity-settled
share-based
payments - - 70,993 - - - - - 70,993
On disposal of
subsidiaries - - - (39,467) - - 166,865 - 127,398
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Balance at 31
December 2015 2,657,234 6,732,714 (11,391,424) - 43,333 2,416,667 - - 458,524
Changes in equity in 2016
Total comprehensive
income
for the year - - 1,567,464 - - - - - 1,567,464
Issue of shares 15 2,450,545 70,455 - - - - - - 2,521,000
Costs in
respect of
shares
issued - (63,025) - - - - - - (63,025)
Equity-settled
share-based
payments 14 - - 69,589 - - - - - 69,589
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Balance at 31
December 2016 5,107,779 6,740,144 (9,754,371) - 43,333 2,416,667 - - 4,553,552
Merger reserve
The merger reserve has been created as a result of the acquisition of the whole of the issued share
capital of Central Asia Resources Limited ('CAR') by the Company in exchange for shares in the Company
and the nominal value. It represents the difference between the fair value of the share capital issued
by the Company and the nominal value.
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2016
2016 2015
GBP GBP GBP GBP
Cash flows from operating activities
Operating loss (778,093) (601,892)
Depreciation of property, plant and
equipment 425 425
Increase in inventories - -
Increase/(decrease) in trade and other
receivables 124,143 (130,552)
Increase/(decrease) in trade and other
payables 6,701 (96,409)
Equity-settled share based payments 69,589 70,993
Other movement - 33,955
------------------ ------------------
Net cash used in operating activities
- continuing operations (577,235) (723,480)
Investing activities
Finance income - 162
------------------ ------------------
Net cash (outflow)/inflow
investing activities - 162
Capital expenditure and
financial investment
Payments to acquire tangible
assets - (1,699)
Payments to acquire
investments (1,796,543) -
------------------ ------------------
Net cash (outflow)/inflow
for capital expenditure (1,796,543) (1,699)
Acquisitions and disposals
Cash on disposal of
subsidiary
undertaking - (247)
------------------ ------------------
Net cash outflow for
acquisitions and disposals - (247)
Financing activities
Issue of share capital 2,521,000 1,076,150
Proceeds received from
issue of derivative
financial
asset - 12,404
Cost of share issue (63,025) (53,808)
Convertible unsecured loan
notes - 50,000
------------------ ------------------
Net cash generated from
financing activities 2,457,975 1,084,746
------------------ ------------------
Net increase in cash
and cash equivalents
in year 84,197 359,482
Cash and cash equivalents
at beginning of the year 382,216 22,734
------------------ ------------------
Cash and cash equivalents at end of
the year 466,413 382,216
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2016
1 Accounting policies and basis of preparation
1.1 General information
Prospex Oil and Gas Plc is incorporated in England and Wales
and is quoted on the AIM Market of the London Stock Exchange
Plc. The address of its registered office is Stonebridge House,
Chelmsford Road, Hatfield Heath, Essex CM22 7BD. The registered
number of the company is 03896382.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment
in which the company operates.
1.2 Going concern
The current economic environment is challenging and the Company
has reported an operating loss for the year. These losses are
expected to continue in the current accounting year to 31 December
2017.
The Company regularly carries out fund-raising exercises in
order that it can provide the necessary working capital and
investment funds for the Company. As detailed in note 20, since
the year end, the Company has raised GBP850,000 before expenses,
through the issue of new ordinary shares.
The Board expects to continue to raise additional funding as
and when required to cover the Company's investments, primarily
from the issue of further shares.
As such, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for the foreseeable future. For this reason, they continue
to adopt the going concern basis in preparing the financial
statements.
1.3 Basis of preparation
The Company financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted
by the European Union, (IFRSs) and International Financial
Reporting Interpretations Committee ('IFRIC') interpretations
issued by the International Accounting Standards Board (IASB)
as adopted by the European Union and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
The Company financial statements have been prepared under the
historical cost convention or fair value where appropriate.
1.4 Basis of consolidation
Subsidiaries include all entities over which the Company has
the power to govern financial and operating policies. The existence
and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether the Company
controls another entity. Subsidiaries are consolidated from
the date on which control commences until the date that control
ceases. Intra-group balances and any unrealised gains and losses
on income or expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
The Company is an investment entity and, as such, does not
consolidate the investment entities it controls. The Company's
interests in subsidiaries are recognised at fair value through
profit and loss.
1 Accounting policies
1.5 Property plant and equipment
Property, plant and equipment are stated at cost less depreciation.
Depreciation is provided at rates calculated to write off the
cost less estimated residual value of each asset over its expected
useful life, as follows:
Fixtures, fittings & equipment 25% per annum on the reducing balance
Motor vehicles
1.6 Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill,
are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation 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
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs to
sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are
separately identifiable cash flows (Cash Generating Units).
Non-financial assets other than goodwill that have suffered
impairment are reviewed for possible reversal of the impairment
at each reporting date.
1.7 Financial instruments
Financial assets and financial liabilities are recognised on
the balance sheet when the Company becomes a party to the contractual
provisions of the instrument.
1.8 Loans and receivables
These assets are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
The principal financial assets of the company are loans and
receivables, which arise principally through the provision
of goods and services to customers (e.g. trade receivables)
but also incorporate other types of contractual monetary asset.
They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These
are classified as non-current assets.
The Company's loans and receivables are recognised and carried
at the lower of their original amount less an allowance for
any doubtful amounts. An allowance is made when collection
of the full amount is no longer considered possible.
The Company's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position.
Cash and cash equivalents include cash at bank and in hand
and short-term deposits with an original maturity of three
months or less.
1.9 Trade and other payables
Trade and other payables are initially measured at fair value
and subsequently measured at amortised cost using the effective
interest rate method.
1 Accounting policies
1.10 Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences
a residual interest in the assets of the entity after deducting
all of its financial liabilities.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in
the balance sheet. Finance costs and gains or losses relating
to financial liabilities are included in the profit and loss
account. Finance costs are calculated so as to produce a constant
rate of return on the outstanding liability.
Where the contractual terms of share capital do not have any
terms meeting the definition of a financial liability then
this is classed as an equity instrument. Dividends and distributions
relating to equity instruments are debited direct to equity.
Equity comprises the following:
- Share capital represents the nominal value of equity shares;
- Share premium represents the excess over nominal value of
the fair value of consideration received for equity shares,
net of expenses of the share issue;
- Profit and loss reserve represents retained deficit;
- Other reserve represents the capital redemption reserve
arising on redemption of shares in previous years and own
share reserve.
1.11 Equity-settled share-based payment
The Company makes equity-settled share-based payments. The
fair value of options granted is recognised as an expense,
with a corresponding increase in equity. The fair value is
measured at grant date and spread over the vesting period,
which is the period over which all of the specified vesting
conditions are to be satisfied. The fair value of the options
granted is measured based on the Black-Scholes framework,
taking into account the terms and conditions upon which the
instruments were granted. At each balance sheet date, the
Company revises its estimate of the number of options that
are expected to become exercisable. It recognises the impact
of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
1.12 Taxation
The income tax expense or taxation recoverable represents
the sum of tax currently payable or recoverable and deferred
tax.
The tax currently payable is based on the taxable profit for
the period using the tax rates that have been enacted or substantially
enacted by the balance sheet date. Taxable profit differs
from the net 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.
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. Deferred tax is determined using tax rates
that have been enacted or substantially enacted at the balance
sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred tax liability
is settled. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
to equity, in which case the deferred tax is also dealt with
in equity. Deferred tax assets are only recognised to the
extent that it is probable that future taxable profit will
be available against which the asset can be utilised.
1 Accounting policies
1.13 Leasing
Rentals payable under operating leases are charged against
income on a straight line basis over the lease term.
1.14 Investments
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of
selling in the short term. Assets in this category are classified
as current assets.
Financial assets carried at fair value through profit or loss
are initially recognised at fair value and transaction costs
are expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows from the
investments have expired or have been transferred and the
company has transferred substantially all risks and rewards
of ownership. Financial assets at fair value through profit
or loss are subsequently carried at fair value.
Gains or losses arising from changes in the fair value of
the financial assets at fair value through profit or loss
are presented in the income statement within 'other gains/(losses)
- net' in the period in which they arise.
1.15 Pensions
The company operates a defined contribution scheme for the
benefit of its employees. Contributions payable are charged
to the profit and loss account in the year they are payable.
1 Accounting policies
Accounting Standards issued but not yet effective and/or
1.16 adopted
As at the date of approval of these financial statements,
the following standards were in issue but not yet effective.
These standards have not been adopted early by the company
as they are not expected to have a material impact on the
company's financial statements.
Effective
date (period
beginning
on or after)
IFRS Amendments - Classification and measurement 01/01/2018
2 of share-based payments transactions
IFRS Amendment - applying IFRS 9 "Financial Instruments"
4 with IFRS 4 "Insurance Contracts" 01/01/2018
IFRS Financial instruments - incorporating requirements 01/01/2018
9 for classification and measurement, impairment,
general hedge accounting and de-recognition
IFRS Disclosure of interests in other activities 01/01/2017
12 - amendments resulting from Annual Improvements
2014 - 2016 cycle. (clarifying scope)
IFRS Revenue from contracts with customers, and
15 the related clarifications 01/01/2018
IFRS Leases - recognition, measurement, presentation
16 and disclosure. 01/01/2019
IAS 7 Statement of cash flows - Amendments resulting 01/01/2017
from the disclosure initiative
IAS 12 Income taxes - Amendments regarding recognition 01/01/2017
of deferred tax assets for unrealised losses
IAS 28 Amendment resulting from Annual Improvement 01/01/2018
2014 - 2016 cycle, clarifying certain fair
value measurements
IAS 40 Amendment - Transfers of investment property 01/01/2018
The International Financial Reporting Interpretations Committee
has also issued interpretations which the company does not
consider will have a significant impact on the financial
statements.
IFRIC Foreign currency translations and advance
22 consideration 01/01/2018
2 Critical accounting estimates and judgements
The preparation of the financial information in conformity
with IFRS requires the use of certain critical accounting estimates
that affect the reported amounts of assets and liabilities
at the date of the financial information and the reported amounts
of revenue and expenses during the reporting period. Although
these estimates are based on management's best knowledge of
the amounts, events or actions, actual results ultimately may
differ from these estimates. The estimates and underlying assumptions
are as follows:
Investment entities
The judgements, assumptions and estimates involved in the Company's
accounting policies that are considered by the Board to be
the most important to the portrayal of its financial condition
are the fair valuation of the investment and the assessment
regarding investment entities. The investment portfolio is
held at fair value. The Directors review the valuations policies,
process and application to individual investments.
Entities that meet the definition of an investment entity within
IFRS 10 are required to account for most investments in controlled
entities, as well as investments in associates and joint ventures,
at fair value through profit and loss. The Board has concluded
that the Company continues to meet the definition of an investment
entity as its strategic objective of investing in portfolio
investments for the purpose of generating returns in the form
of investment income and capital appreciation remains unchanged.
Fair value is the underlying principle and is defined as "the
price that would be received to sell an asset in an orderly
transaction between market participants at the measurement
date". Fair value is therefore an estimate and, as such, determining
fair value requires the use of judgement. The quoted assets
in our portfolio are valued at their closing bid price at the
balance sheet date. The largest investment in the portfolio,
however, is represented by an unquoted investment.
Impairment of assets
The Company is required to test, on an annual basis, whether
its non-current assets have suffered any impairment. Determining
whether these assets are impaired requires an estimation of
the value in use of the cash-generating units to which the
assets have been allocated. The value in use calculation requires
the Directors to estimate the future cash flows expected to
arise from the cash-generating unit and a suitable discount
rate in order to calculate the present value. Subsequent changes
to the cash generating unit allocation or to the timing of
cash flows could impact on the carrying value of the respective
assets.
Recoverability of other financial assets
The majority of the Company's financial assets represent loans
provided to its subsidiary, which are associated with funding
of mineral exploration and development projects. The recoverability
of such loans is dependent upon the discovery of economically
recoverable reserves, the ability of the Company to maintain
necessary financing to complete the development of the reserves
and future profitable production or proceeds from the disposition
thereof.
Share based payments
The estimates of share based payments requires that management
selects an appropriate valuation model and make decisions on
various inputs into the model including the volatility of its
own share price, the probable life of the options before exercise,
and behavioural consideration of employees.
Deferred tax assets
Deferred taxation is provided for using the liability method.
Deferred tax assets are recognised in respect of tax losses
where the Directors believe that it is probable that future
profits will be relieved by the benefit of tax losses brought
forward. The Board considers the likely utilisation of such
losses by reviewing budgets and medium term plans for the Company.
The Directors have decided that no deferred tax asset should
be recognised at 31 December 2016. If the actual profits earned
by the Company differs from the budgets and forecasts used
then the value of such deferred tax assets may differ from
that shown in these financial statements.
3 Segmental information
The Company is an Investing Company. The results for this continuing
operation, all of which were carried out in the UK, are disclosed
in the Income Statement. The net assets as at 31 December 2016
as shown on the Statement of Financial Position all relate
to the Investment activity.
4 Operating loss
2016 2015
GBP GBP
Operating loss is stated after charging:
Depreciation of tangible assets 425 425
Loss on foreign exchange transactions 4,584 250
- Fees payable to the company's
auditor for the audit of
the company's financial
Auditors' remuneration statements 16,250 17,545
- Fees payable to the company's
auditors for non-audit services - 2,000
5 Finance income
2016 2015
GBP GBP
Bank interest received - 162
6 Income tax expense
2016 2015
GBP GBP
Domestic current year tax
Adjustment for prior years - (411)
-------------- --------------
Total tax expenses - (411)
Factors affecting the tax charge for the year
Profit before income taxation 1,567,464 68,900
Profit on ordinary activities before taxation
multiplied by standard rate of UK corporation
tax of 20.00% (2015 - 20.00%) 313,493 13,780
-------------- --------------
Effects of:
Non deductible expenses 15,768 20,207
Depreciation add back 85 85
Capital allowances - (340)
Tax losses not utilised 139,765 (80,650)
Unrealised chargeable gains (469,111) -
Prior year - (411)
Other tax adjustments - 46,918
-------------- --------------
(313,493) (14,191)
-------------- --------------
Total tax expense - (411)
There is no provision for UK Corporation Tax due to adjusted
losses for tax purposes, subject to agreement with HM Revenue
and Customs. The deferred asset of approximately GBP686,000
(2015: GBP578,000) arising from the accumulated tax losses
of approximately GBP4.0m (2015: GBP3.4m) carried forward has
not been recognised but may become recoverable against future
trading profits.
7 Earnings/loss per share
The (loss)/earnings and number of shares used in the calculation
of earnings per ordinary share are set out below:
2016 2015
GBP GBP
Basic:
Continuing operations 1,567,464 (502,434)
Discontinued operations - 571,745
------------------ ------------------
Loss for the financial period 1,567,464 69,311
Weighted average of ordinary shares 163,085,489 30,677,884
There was no dilutive effect from the options outstanding during
the period (note 14).
8 Tangible fixed assets
Plant
and machinery
GBP
Cost
At 1 January 2016 & at 31 December 2016 1,699
--------------
Depreciation
At 1 January 2016 425
Charge for the year 425
--------------
At 31 December 2016 850
--------------
Net book value
At 31 December 2016 849
At 31 December 2015 1,274
9 Investments
The Company Investment Investment entity
at fair subsidiaries
value Total
Shares Loans
GBP GBP GBP GBP
Cost
At 1 January 2016 - 100 - 100
Additions 194,655 - 1,601,888 1,796,543
Fair value movement 37,057 2,308,500 - 2,345,557
-------------- -------------- -------------- --------------
At 31 December 2016 231,712 2,308,600 1,601,888 4,142,200
Investments are recognised and de-recognised
on the date when their purchase or sale is subject
to a relevant contract and the associated risks
and rewards have been transferred. The Company
manages its investments with a view to profiting
from the receipt of investment income and capital
appreciation from changes in the fair value
of investments.
All investments are initially recognised at
the fair value of the consideration given and
are subsequently measured at fair value through
profit and loss.
Unquoted investments, including both equity
and loans are designated at fair value through
profit and loss and are subsequently carried
in the statement of financial position at fair
value. Fair value is determined in line with
the fair value guidelines under IFRS.
In accordance with IFRS 10, the proportion of
the investment portfolio held by the Company's
unconsolidated subsidiaries is presented as
part of the fair value of investment entity
subsidiaries, along with the fair value of their
other assets and liabilities.
The holding period of the Company's investment
portfolio is on average greater than one year.
For this reason the portfolio is classified
as non-current. It is not possible to identify
with certainty investments that will be sold
within one year.
9 Investments
Investments in investment entity subsidiaries are accounted
for as financial instruments at fair value through profit and
loss and are not consolidated in accordance with IFRS10.
These entities hold the Company's interests in investments in
portfolio companies. The fair value can increase or reduce from
either cash flows to/from the investment entities or valuation
movements in line with the Company's valuation policy.
The fair value of these entities is their net asset values.
The Directors determine that in the ordinary course of business,
the net asset values of an investment entity subsidiary are
considered to be the most appropriate to determine fair value.
At each reporting period, they consider whether any additional
fair value adjustments need to be made to the net asset values
of the investment entity subsidiaries. These adjustments may
be required to reflect market participants' considerations about
fair value that may include, but are not limited to, liquidity
and the portfolio effect of holding multiple investments within
the investment entity subsidiary.
Subsidiary
The Company owns the whole of the issued share capital of PXOG
County Limited, a company registered in England and Wales. This
company owns the Company's principal investment, a 49% shareholding
in Hutton Poland Limited. Full details of this investment is
set out in the Chairman's report.
At the balance sheet date PXOG County Limited had net assets
of GBP3,910,488 and had made a profit of GBP2,308,500 for the
period then ended.
10 Trade and other receivables
2016 2015
GBP GBP
Other receivables 21,484 138,779
Prepayments and accrued income 10,282 17,130
-------------- --------------
31,766 155,909
The Directors consider that the carrying amount of trade
and other receivables approximates to their fair value.
11 Cash and cash equivalents
2016 2015
GBP GBP
Cash at bank and in hand 466,413 382,216
The Directors consider that the carrying amount of cash
and cash equivalents approximates to their fair value. All
of the Company's cash and cash equivalents are at floating
rates of interest.
12 Trade and other payables
2016 2015
GBP GBP
Trade payables 53,123 1,349
Taxes and social security costs 9,138 9,829
Other payables - 26,751
Accruals and deferred income 25,415 42,946
---------------- ----------------
87,676 80,975
The Directors consider that the carrying amount of trade and other
payables approximates to their fair value.
13 Pension and other post-retirement benefit commitments
Defined contribution
2016 2015
GBP GBP
Contributions payable by the company for the
year 9,000 7,125
14 Share-based payments
Share options
At 31 December 2015 and 31 December 2016 outstanding awards
to subscribe for ordinary shares of 1p each in the Company,
granted in accordance with the rules of the share option scheme,
were as follows:
31 December 2015 Shares Weighted Weighted
under option average average exercise
remaining price (pence)
contractual
life (years)
Brought forward 268,400 6.3 143.62
Granted 3,659,116 - 3.05
Lapsed (24,000) - (2.08)
---------------- ---------------- ----------------
Carried forward 3,903,516 9.1 11.86
31 December 2016 Shares Weighted Weighted
under option average average exercise
remaining price (pence)
contractual
life (years)
Brought forward 3,903,516 9.1 11.86
Granted 20,728,545 - 1.03
Lapsed - -
---------------- ---------------- ----------------
Carried forward 24,632,061 3.59 2.74p
All options were exercisable at the year end. No options were
exercised during the year.
The following share-based payment arrangements were in existence
during the current and prior years.
Options Number Expiry Exercise Fair value
date price at grant
date
1. Granted 31
July 2007 36,400 31/07/2017 250.0p 82.5p
2. Granted 30
April 2012 208,000 30/04/2022 125.0p 47.5p
3. Granted 16
April 2015 2,847,116 15/04/2025 3.0p 1.94p
4. Granted 16
April 2015 812,000 15/04/2018 3.0p 1.94p
5. Granted 22
September 2016 1,434,209 22/09/2019 1.0p 0.53p
6. Granted 22
September 2016
* 13,694,584 22/09/2019 1.0p 0.31p
7. Granted 22
September 2016
* 4,164,000 22/09/2019 1.1p 0.29p
8. Granted 23
December 2016
* 1,436,000 23/12/2019 1.1p 0.53p
14 Share-based payments
The fair value of remaining share options has been calculated
using the Black Scholes model. The assumptions used in the calculation
of the fair value of the share options outstanding during the
year are as follows:
Options Grant date Exercise Expected Expected Risk-free
share price price volatility option interest
life rate
1. Granted 31 July
2007 212.5p 250.0p 100% 5 years 4.4%
2. Granted 30 April 0.24% -
2012 175.0p 125.0p 32% 3.5 years 0.43%
3. Granted 16 April
2015 4.0p 3.0p 71.5% 3 years 0.71%
4. Granted 16 April
2015 4.0p 3.0p 71.5% 3 years 0.71%
5. Granted 22 September
2016 1.7p 1.0p 71.0% 3 years 0.10%
6. Granted 22 September
2016 * 1.7p 1.0p 71.0% 3 years 0.10%
7. Granted 22 September
2016 * 1.7p 1.1p 71.0% 3 years 0.10%
8. Granted 23 December
2016 * 2.5p 1.1p 79.0% 3 years 0.28%
* These options vest once the share price of the Company has
closed at 5p or higher for 5 consecutive trading days.
The fair value has been calculated assuming that there will be
no dividend yield.
Volatility was determined by reference to the standard deviation
of expected share price returns based on a statistical analysis
of daily share prices over a 3 year period to grant date. All
of the above options are equity settled and the charge for the
year is GBP69,589 (2015: GBP70,993).
15
Share capital 2016 2015 2016 2015
Number Number GBP GBP
Allotted, called up and fully paid
Ordinary shares of 1p
each 285,785,836 40,731,291 2,857,858 407,313
Deferred shares of 0.1p
each 942,462,000 942,462,000 942,462 942,462
Deferred shares of GBP24
each 54,477 54,477 1,307,459 1,307,459
------------------ ------------------
5,107,779 2,657,234
In June 2016, the Company raised GBP1.64m, before expenses, through
the issue of 164,600,000 New Ordinary Shares of 1p each at a
price of 1p per share to provide capital for the Company's Investing
Policy.
In August 2016, the Company raised GBP100,000, before expenses,
through the issue of 10,000,000 New Ordinary Shares of 1p each
at a price of 1p per share to provide capital for the Company's
Investing Policy.
In September 2016, the Company raised GBP775,000, before expenses,
through the issue of 70,454,545 New Ordinary Shares of 1p each
at a price of 1.1p per share to provide capital for the Company's
Investing Policy.
The deferred shares have no rights to vote, attend or speak at
general meetings of the Company or to receive any dividend or
other distribution and have limited rights to participate in
any return of capital on a winding-up or liquidation of the Company.
16 Directors' emoluments
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling activities
of the Company, including all directors of the Company.
2016 2015
GBP GBP
Directors
Emoluments for qualifying services 97,665 126,659
Benefit in kind 4,200 2,975
Pension contributions 9,000 7,125
-------------- --------------
110,865 136,759
Directors and key management personnel 2016 2015
Salaries Benefit
and fees in kind Pension Total
GBP GBP GBP GBP GBP
Directors' emoluments
Edward Dawson 80,750 4,200 9,000 93,950 82,350
William Smith 8,500 - - 8,500 8,500
Richard Mays 8,000 - - 8,000 9,000
Gavin Burnell (resigned
28 April 2016) - - - - 8,576
James
Smith
(appointed
22 December
2016) 415 - - 415 -
Gerry Desler (resigned
14 April 2015) - - - - 10,000
Christian Schaffalitzky
(resigned 14 April
2015) - - - - 3,333
Garth Earls (resigned
14 April 2015) - - - - 5,000
Richard Nolan (resigned
14 April 2015) - - - - 10,000
-------------- -------------- -------------- -------------- --------------
97,665 4,200 9,000 110,865 136,759
The number of directors for whom retirement benefits are accruing
under money purchase pension schemes amounted to 1 (2015 - 1).
16 Directors' emoluments
The Directors interests in share options as at 31 December 2016
are as follows:
Director Options Exercise Date of First Final date
at 31 price grant date of of exercise
December exercise
2016
Edward Dawson 680,212 3.05p 14/04/2015 14/04/2015 14/04/2025
Edward Dawson 971,663 1.0p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson * 4,438,000 1.0p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson * 1,292,000 1.1p 22/09/2016 22/09/2016 22/09/2019
Richard Mays 541,726 3.05p 14/04/2015 14/04/2015 14/04/2025
Richard Mays 20,196 1.0p 22/09/2016 22/09/2016 22/09/2019
Richard Mays * 2,327,418 1.0p 22/09/2016 22/09/2016 22/09/2019
Richard Mays * 1,436,000 1.1p 22/09/2016 22/09/2016 22/09/2019
William Smith 541,726 3.05p 14/04/2015 14/04/2015 14/04/2025
William Smith 20,196 1.0p 22/09/2016 22/09/2016 22/09/2019
William Smith * 2,327,418 1.0p 22/09/2016 22/09/2016 22/09/2019
William Smith * 1,436,000 1.1p 22/09/2016 22/09/2016 22/09/2019
James Smith * 1,436,000 1.1p 23/12/2016 23/12/2016 23/12/2019
* These options vest once the share price of the Company has closed
at 5p or higher for 5 consecutive trading days.
17 Employees
Number of employees
There were 5 employees during the year including the directors
(2015: 5).
Employment costs
2016 2015
GBP GBP
Wages and salaries 192,665 211,659
Social security costs 19,015 20,186
Other pension costs 9,000 7,125
Equity settled share-based payments 69,589 70,993
-------------- --------------
290,269 309,963
18 Control
In the opinion of the directors, there is no ultimate controlling
party.
19 Related party transactions
Included in trade and other receivables is an amount of GBP1,601,888
(2015: GBPnil) due from PXOG County Limited, the company's
wholly owned subsidiary.
During the year, there were consultancy fees of GBP15,200 (2015:
GBP17,200) charged by Sallork Legal and Commercial Consulting
Limited ("Sallork") and included in trade payables at the year
end is GBPnil (2015: GBP1,200) owing to Sallork. Richard Mays
is a director and shareholder of Sallork.
Included in trade and other payables are the following balances
due to Directors as at 31 December 2016.
2016 2015
GBP GBP
Edward Dawson 13,660 3,881
20 Subsequent events
Share reorganisation
On 20 February 2017, the Company held a General Meeting at
which shareholders approved a share capital reorganisation.
The reorganisation was effected through the subdivision of
each of the Existing Ordinary Shares of 1p each into one New
Ordinary Share of 0.1p each and one New Deferred Share of 0.9p
each.
Placing
In February 2017, following shareholder approval of the share
reorganisation, the Company completed a placing to raise approximately
GBP850,000, before expenses, from the issue of 170,000,000
new ordinary shares of 0.1p each ("New Ordinary Shares") at
a price of 0.5p per share (the "Placing"). The funds raised
will be used towards the Company's ongoing evaluation of a
number of potential projects, in line with its strategy to
build a portfolio of investments in the European oil and gas
sector, and will also be used for general working capital purposes.
Investment valuation
Drilling operations at the Boleslaw-1 well ('Boleslaw-1' or
'the Well') commenced on 10 December 2016 and continued until
10 January 2017. However no recoverable hydrocarbons were indicated
on the mud logs. As a result, the operator advised the Company
that the Well was to be plugged and abandoned.
While the outcome was disappointing, Boleslaw was drilled safely,
on schedule, and on budget. The Directors believe this is testament
to the performance of the engineering crew on the ground as
well as the quality of the pre-drill technical work undertaken
by the partners. Boleslaw was the first well to be drilled
on the Kolo licence, which covers an area of 1,150 sq. km and
which is located in a working hydrocarbon system. Further technical
work will be conducted to generate an updated geological and
hydrocarbon system model, as the partners plan the next steps
for the Licence. This work will incorporate all the data and
geological samples recovered from the Well.
In accordance with IAS10 "Events after the reporting period"
no adjustment has been made to the carrying value of the Company's
investment in its 'Investment Entity Subsidiary', as the evidence
that the Well was dry was obtained after the balance sheet
date.
The result of this first well is likely to have a negative
impact on the value of the Company's investment, which at the
balance sheet date was valued at US$4.8m. The valuation was
based on a Competent Person's Report which was completed mid-2016.
21 Financial instruments
The principal financial instruments used by the Company,
from which financial instrument risk arises are as follows
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
A summary of the financial instruments held by category is
provided below:
2016 2015
Financial assets GBP GBP
Loans and receivables
Trade and other receivables 31,766 155,909
Cash and cash equivalents 466,413 382,216
------------------ ------------------
Total financial assets 498,179 538,125
2016 2015
Financial liabilities GBP GBP
Trade and other payables 87,676 80,975
The Directors consider that the carrying amount of trade
and other receivables and trade and other payables approximate
their fair value.
Financial risk management
The Company's activities expose it to a variety of risks
including market risk (foreign currency risk and interest
rate risk), credit risk and liquidity risk. The Company manages
these risks through an effective risk management programme
and through this programme, the Board seeks to minimise potential
adverse effects on the Company's financial performance.
The Board provides written objectives, policies and procedures
with regards to managing currency and interest risk exposures,
liquidity and credit risk including guidance on the use of
certain derivative and non derivative financial instruments
Credit risk
Credit risk is the risk of financial loss to the Company
if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. The Company's credit
risk is primarily attributable to its receivables and its
cash deposits. It is Company policy to assess the credit
risk of new customers before entering contracts. The credit
risk on liquid funds is limited because the counterparties
are banks with high credit-ratings assigned by international
credit-rating agencies.
21 Financial instruments
Liquidity risk and interest rate risk
Liquidity risk arises from the Company's management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due. The
Board regularly receives cash flow projections for a minimum
period of 12 months, together with information regarding cash
balances monthly.
The Company is principally funded by equity and invests in
short-term deposits, having access to these funds at short
notice. The Company's policy throughout the period has been
to minimise interest rate risk by placing funds in risk free
cash deposits but also to maximise the return on funds placed
on deposit.
All cash deposits attract a floating rate of interest. The
benchmark rate for determining interest receivable and floating
rate assets is linked to the UK base rate.
Foreign currency exposure
The Company has no exposure to foreign currency risk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKBDPFBKDOPK
(END) Dow Jones Newswires
May 03, 2017 02:00 ET (06:00 GMT)
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