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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Westmount Energy Limited | LSE:WTE | London | Ordinary Share | GB00B0S5KR31 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.50 | 1.40 | 1.60 | 1.50 | 1.50 | 1.50 | 0.00 | 07:36:40 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | -2.7M | -2.97M | -0.0206 | -0.73 | 2.16M |
From Apr 2022 to Apr 2024
TIDMWTE
RNS Number : 8212E
Westmount Energy Limited
01 November 2022
1 November 2022
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the year ended 30 June 2022, and hereby gives notice that the Annual General Meeting of Westmount Energy Limited will be held at No 2 The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel Islands on 8 December 2022 at 11.00.
Copies of the Company's results and Notice of AGM are available on the Company's website, www.westmountenergy.com, and will be posted to shareholders today.
CHAIRMAN'S REVIEW
2022 Highlights
-- Cash balance of GBP1.0M at 30 June 2022; no debt
-- Indirect exposure to the recently spudded Gazania-1 well, targeting 300 MMbbls light oil resource, in Block 2B, Orange Basin, South Africa
-- Drilling interregnum with respect to the Canje and Kaieteur blocks, offshore Guyana, while environmental permitting is progressing with a view to potential new drilling programs on these blocks from 2023
-- Sector consolidation manoeuvres - proposed 'all paper' acquisition of JHI Associates Inc.
by Eco (Atlantic) Oil & Gas Ltd announced, but subsequently terminated
Globally, the last 12 months have been characterised by a dramatic recovery from the economic effects of the COVID pandemic. Spiking demand, fostered by various government stimuli and accommodative monetary policies, had already resulted in tightening supply chains prior to the impact of the Russian invasion of Ukraine in February and subsequent disruptions caused by the western response via sanctions imposed upon Russia. While global oil demand has rebounded towards pre-COVID levels of approximately 100 MMbbls per day, supply has struggled to keep up as reflected in the seven successive quarters of declining global oil inventories prior to April 2022. From mid-year the global economic outlook has started to weaken as spiralling inflation has resulted in tightening monetary policies, higher interest rates and bearish equity markets. Brent oil prices which peaked above USD $120 per barrel in June have since continued to slide to below USD $90 per barrel in early October on the back of recessionary concerns. Nevertheless, while the long-term picture suggests that growth in global oil demand will continue to decelerate, the near-term outlook remains volatile. Factors that are likely to influence near term prices include - the tapering of Strategic Petroleum Reserve releases to the market; switching from gas to oil for electricity generation due to high gas prices; potential ending of zero-COVID policy and rolling lockdowns in China, the world's largest oil importer; impact of 2 MMbbls per day OPEC+ supply cuts announced in early October; the trajectory of the war in Ukraine and associated western sanctions; trends in exchange rates, with current US dollar strength dampening demand for dollar denominated commodities like oil.
While there is evidence that long term GDP growth has started to decouple from total energy demand and CO(2) emissions growth, the short-term trajectory indicates increasing global energy demand(1) . Regional underperformance of some renewable energy sources together with the ongoing war in Ukraine is reshaping the immediate energy transition narrative, bringing greater focus on energy security, system resilience and affordability in the near term. Europe, in particular, faces significant challenges with respect to energy security and affordability while trying to decarbonize - in the context of re-engineering its supply chains to substitute for previous oil and gas imports from Russia. Longer term the conflicting challenges of growing the global energy supply by about 20 percent over the next 20 years while reaching net zero emissions by 2050 is being undermined by underinvestment in the oil and gas sector. As the recent 'unintended consequences' of over reliance on renewable energy and/or single suppliers of energy have shown, energy transition is complex and multi-dimensional which suggests that multiple reliable sources of energy including low cost, low carbon, oil and gas that can be rapidly commercialised, will have a role to play in the energy system for decades to come.
During the last twelve months Guyana has continued its journey towards becoming a significant oil producing nation with rapidly progressing offshore developments, including the expected installation of at least six Floating Production Storage and Offloading (FPSO) units on the Stabroek Block by end 2027 (with a production capacity of more than 1 million BOPD) and the potential for up to 10 FPSOs based upon the current discovered resource inventory of in excess of 11 billion barrels of oil equivalent.(2,3) Three of these FPSOs are already operating or are under construction - with the Liza Phase 1 (Destiny FPSO) producing at a rate of 140,000 BOPD during 2022 (20,000 BOPD above nameplate capacity), Liza Phase 2 (Unity FPSO) on stream since February 2022 reaching its nameplate production capacity of 220,000 BOPD in early June and with a third field development, Payara (Prosperity FPSO), also with 220,000 BOPD capacity, on track for start-up in late 2023. In addition, a 4(th) development was sanctioned in April 2022. This will bring on stream the Yellowtail discoveries (One Guyana FPSO), targeting a gross production capacity of 250,000 BOPD and first oil in 2025. A number of follow-on developments are also envisaged, including a 5th project centred on the Uaru-Mako discovery, with a Plan of Development expected to be submitted to the government by year end 2022 and first oil targeted at the end of 2026.(3)
In parallel with the development of the already discovered resource offshore Guyana, the multi-billion barrels undiscovered upside in the basin continues to attract aggressive exploration investment, driven by large prospects, low breakeven costs, low carbon emissions and the energy transition dynamics. In October 2021, on the back of a string of exploration successes, estimates of gross discovered resources on the Stabroek Block were revised upwards to approximately 10 billion barrels of oil equivalent. The preceding exploration drilling 'purple patch' included discoveries at Redtail-1, Yellowtail-2, Uaru-2, Mako-2, Longtail-3, Turbot-2, Whiptail-1, Whiptail-2, Pinktail-1 and Cataback-1 bringing the total number of reported significant discoveries at that time on the Stabroek Block to twenty-one. Relentless exploration success has continued into 2022 with an additional nine significant discoveries reported so far this year (Fangtooth-1, Lau Lau-1, Patwa-1, Lukanani-1, Barreleye-1, Seabob-1 Kiru Kiru-1, Yarrow-1 and Sailfin-1) bringing the total number of discoveries to date, on the Stabroek block, to thirty.(3) In April 2022, Hess Corporation announced an increase in the gross discovered recoverable resource estimate for the Stabroek Block to approximately 11 billion barrels of oil equivalent. The positive outcome at Fangtooth-1 is of particular significance as this was the first well dedicated to a deep exploration target in the Stabroek area, with the results indicating the potential for commercial exploitation of the deeper plays and offering encouragement for the drilling of deep targets elsewhere in the basin, including on the Kaieteur and Canje Blocks. With advertised multibillion barrel exploration potential in the basin, exploration drilling continues apace - with a total of 12 exploration and appraisal wells scheduled for drilling on the Stabroek Block in 2022(3) - signalling continued aggressive evaluation of the upside potential in the basin within fixed prospecting licence timeframes.
Separately, in January 2022, the Joint Venture of CGX Energy Inc. and Frontera Energy Corporation reported the Kawa-1 discovery located in the north of the Corentyne Block. This well was spudded in a water depth of 355 metres and drilled to a Total Depth of 6,578 metres. Wireline logging indicates that the well encountered 61m of net hydrocarbon bearing reservoirs within Maastrichtian, Campanian, Santonian and Coniacian intervals. Reservoir fluids are uncertain as MDT fluid samples were not obtained from the well, though the presence of liquid hydrocarbons has been interpreted in the Santonian reservoir, from other analyses.(4) Kawa-1 was plugged and abandoned and the commercial potential of the discovery has yet to be determined. The Joint Venture is planning to follow-up with the Wei-1 exploration well, in Q4 of 2022, targeting stacked Campanian and Santonian channel sandstone reservoirs.
In the Surinamese sector, the Total/Apache consortium has increased its discovery count from four to six with the announcement of the Krabdagu-1 (Block 58) and Baja-1 (Block 53) discoveries in February and August 2022, respectively(4,5) . Prior stacked reservoir discoveries on Block 58 reported generally light oil and gas-condensate pay in shallower Campanian reservoirs overlying light oil pay in deeper Santonian reservoirs - pointing towards some potential challenges around valorisation of large associated gas volumes. The Krabdagu-1 well encountered 90 metres of net oil pay in good quality Maastrichtian and Campanian reservoirs. Subsequent flow testing of two lower intervals, in the Upper and Lower Campanian, indicated the presence of 35(o) -37(o) API oil and a connected oil-in-place resource of 180 MMbbls attributable to these two reservoirs. In spite of reported correlation issues between seismic and well data, Total as operator, continues to focus on appraisal of the shallower Maastrichtian-Campanian reservoirs with a view to progression towards FID in mid-2023 for the initial standalone oil development on Block 58. Results at Sapakara South-1 appraisal well, drilled 4 kms east of the Sapakara-1 discovery well, were announced in November 2021 - confirming the presence of 30m net high-quality black oil in Maastrichtian-Campanian sandstones which flowed 4,800 BOPD during a restricted flow test, with analysis indicating a connected in-place
resource of more than 400 MMbbls in a single reservoir. However, disappointing Maastrichtian-Campanian appraisal outcomes were reported during the period on the eastern side of Kwaskwasi and at Keskesi South-1, together with two exploration failures at Rasper-1 (Block 53) and Dikkop-1 (Block 58).(4,5) In addition, during November 2021, the Total/Apache consortium reported a non-commercial discovery at the Bonboni-1 exploration well in the north of Block 58. This well encountered high quality water bearing reservoirs in the primary Maastrichtian-Campanian targets though a single Maastrichtian sandstone contained 16m of net oil pay with an estimated 25(o) API oil gravity.
Exploration drilling results continue to support the presence of multiple plays, quality reservoirs and the potential for stacked-pay drilling opportunities within the basin. Although the Upper Cretaceous Maastrichtian-Campanian Liza play dominates in terms of number of discoveries and discovered volumes to date the deeper Santonian pools on Block 58, in conjunction with the deeper hydrocarbons reported at Liza-3, Tripletail-1, Yellowtail-2, Uaru-2, Turbot-2, Longtail-3, Hassa-1 and Fangtooth-1 on the Stabroek Block, together with the hydrocarbon shows reported at Sapote-1 on the Canje Block, and the logged net pay in the Santonian-Coniacian intervals at Kawa-1 on the Corentyne Block, all suggest an extensive emerging deeper play fairway within the basin. Offshore Suriname, oil pay has recently been reported from the Zanderij-1 (Shell, Block 42) where the operator was targeting the Santonian and deeper intervals, with well results currently under evaluation.(6) Additional deep drilling with multiple targets is scheduled from Q4 2022 at Wei-1 (CGX Energy Inc., Corentyne Block), at Awari-1 (TotalEnergies, Block 58) and at Fangtooth SE-1, Fish-1 and Lancetfish-1 (ExxonMobil, Stabroek Block).
It is against this backdrop that the hydrocarbon plays and prospect inventories on the Kaieteur and Canje blocks are being reassessed - by integrating the analysis of the extensive core and fluid samples collected during the 2020-2021 drilling campaigns, by updating the regional petroleum system models and by high grading prospects for the next phase of drilling.
Kaieteur Block
The first well on the Kaieteur block, Tanager-1, remains the deepest well drilled in the Guyana-Suriname Basin to date. It was spudded on 11 August 2020, using the Stena Carron drillship. The well was drilled in a water depth of 2,900 metres and reached a total depth of 7,633 metres circa mid-November 2021. Evaluation of LWD, wireline logging and sampling data confirmed 16 metres of net oil pay (20(o) API oil) in high-quality sandstone reservoirs of Maastrichtian age. Although high quality reservoirs were also encountered at the deeper Santonian and Turonian intervals, initial interpretation of the reservoir fluids was reported to be equivocal, requiring further analysis - results of which have yet to be disclosed. Post well analysis and integration of the data collected continues with a view to high grading the next drilling target on the Kaieteur block.
A post-well Netherland, Sewell & Associates Inc. ("NSAI") published CPR (February 14, 2021) indicates that the Tanager-1 Maastrichtian discovery contains a 'Best Estimate' Unrisked Gross (2C) Contingent Oil Resource of 65.3 MMBBLs (Low to High Estimates 17.7 MMBBLs to 131 MMBBLs) - with a 'Best Estimate' Unrisked Net (2C) Contingent Oil Resource attributable to the Kaieteur Block of 42.7 MMBBLs (Low to High Estimates 11.3 MMBBLs to 86 MMBBLs). However, this discovery is currently considered to be non-commercial as a standalone development.
Subsequent to the Tanager-1 discovery, on 24 May 2021, it was announced that Hess Corporation ("Hess") had increased its working interest ("WI") in the Kaieteur Block, offshore Guyana, from 15% to 20% via the farm-down of a 5% WI by Cataleya Energy Limited ("CEL"). Although the details of this farm-in transaction were not disclosed this farm-in, by one of the Stabroek block partners and a leading player in the Guyana-Suriname basin, suggests confidence in the prospective resource potential of the Kaieteur Block and augurs well for the continuing exploration of the area.
On 23 August 2021 it was announced that the date for elective nomination, by the operator, of the prospect target for the second well on the Kaieteur Block has been extended by seven months and on 22 March 2022 a further extension of the nomination date was agreed to 2 October 2023. The Kaieteur Block partners agreed to this extension to facilitate continuing geological and geophysical analysis by the operator and integration of recent and ongoing deep play drilling program results on adjacent blocks into the Kaieteur prospect nomination decision. Under a farm-in agreement executed with ExxonMobil (operator) in 2016, any drilling consequent to the 2nd well prospect nomination decision will commence within nine months of the nomination date. The operator, as farminee, continues to bear all farmor JV expenses during the prospect nomination extension period.
In September 2021, the operator, ExxonMobil, submitted an application for environmental authorization to the Environmental Protection Agency (EPA) to proceed with an up to 12 well exploration campaign on the Kaieteur Block.
The Kaieteur Block is currently operated by an ExxonMobil subsidiary, Esso Production & Exploration Guyana Limited (35%), with Cataleya Energy Limited ("CEL") (20%), Ratio Guyana Limited ("RGL") (25%) and a subsidiary of Hess Corporation, Hess Guyana (Block B) Exploration Limited (20%) as partners. Westmount retains a holding of approximately 5.3% of the issued share capital of Cataleya Energy Corporation ("CEC") the parent company of CEL and circa 0.04% of the issued share capital of Ratio Petroleum Energy Limited Partnership ("Ratio Petroleum") the ultimate holding entity with respect to RGL.
Canje Block
The first well on the Canje block, Bulletwood-1, was spudded on 31 December 2020 using the Stena Carron drillship and was completed in early March. The well was safely drilled in a water depth of 2,846 metres to its planned target depth of 6,690 meters. The primary target in the well was a Campanian age confined channel complex. The well encountered quality reservoirs but non-commercial hydrocarbons. There has been limited disclosure of the well results to date as detailed analysis of the data collected is ongoing. However, the initial results confirm the presence of the Guyana-Suriname petroleum system and the potential prospectivity of the Canje Block.
Initial drilling operations at the second well on the Canje block, Jabillo-1, commenced on 14 March 2021 using the Stena Carron drillship. Previously published information indicated that Jabillo-1 was targeting a Late Cretaceous, Liza-age equivalent, basin floor fan. After interruption for a brief period of maintenance work on the drillship drilling operations at Jabillo-1 recommenced circa 5 June 2021 and were completed in early July. The well was safely drilled in a water depth of 2,903 metres to its planned target depth of 6,475 meters. The well did not encounter commercial hydrocarbons.
The third well on the Canje block, Sapote-1, was spudded circa 29 August 2021, using the Stena DrillMAX drillship, and reached TD in late October 2021. This well is located in the southeast of the Canje Block, approximately 60kms north of the Campanian and Santonian Maka Central-1 stacked pay discovery. The well was safely drilled in a water depth of 2,549 metres to a total depth of 6,758 meters. It encountered non-commercial hydrocarbons in one of the deeper exploration targets.
Westmount holds an indirect interest in the Canje Block as a result of its circa 7.2% interest in the issued share capital of JHI Associates Inc. ("JHI"). The company also holds an additional indirect interest in the Canje Block as a result of its shareholding in Eco (Atlantic) Oil and Ltd. ("EOG") and following the investments in JHI Associates Inc. ("JHI") announced by EOG on 28 June 2021 and 19 January 2022. Subsequent to the initial EOG transaction and a previous 2018 farm-out to Total, JHI was fully carried/funded for the 2021 three well drilling campaign and is also funded for additional drilling, with a reported USD$19.7M in cash and cash equivalents as of 31 December 2021.(7)
On 14 March 2022, EOG announced that it had signed a Commercially Binding Term Sheet to acquire 100% of JHI, including its wholly owned subsidiary JHI Associates (BVI) Inc., via a cashless transaction. However, on 14 June 2022 EOG announced that the proposed acquisition had been terminated.(7)
The Canje Block is currently operated by an ExxonMobil subsidiary, Esso Exploration & Production Guyana Limited (35%), with TotalEnergies E&P Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%) and Mid-Atlantic Oil & Gas Inc. (12.5%) as partners.
Orinduik Block
Westmount continues to hold an indirect interest in the Orinduik Block as a result of its circa 0.4% interest in the issued share capital of Eco (Atlantic) Oil and Gas Ltd. ("EOG"). Over the last 12 months the focus of the Orinduik Block JV partners has continued to be on the analysis and assimilation of the 2019/20 drilling results and data gathering program, the reprocessing and re-interpretation of the 3D seismic data, and the highgrading of the Cretaceous light oil prospect inventory with a view to target selection for the next drilling campaign on the Orinduik Block.
The Orinduik Block is currently operated by Tullow Guyana B.V. (60%), with TOQAP Guyana B.V. (25%) and EOG (15%) as partners. TOQAP Guyana B.V. is jointly owned by TotalEnergies E&P Guyana B.V. (60%) and Qatar Petroleum (40%).
Portfolio Effect
Westmount's investment strategy has been to provide shareholders exposure to a portfolio of drilling outcomes in the Guyana-Suriname Basin, in blocks immediately adjacent to the prolific Stabroek Block. Since 2019, we have participated, indirectly via our investee companies, in six wells (Jethro-1, Joe-1, Tanager-1, Bulletwood-1, Jabillo-1 and Sapote-1), offshore Guyana, which have yielded three oil discoveries (Jethro, Joe and Tanager), but no standalone commercial success to date. While these initial drilling outcomes are below our expectations for the portfolio, the results provide encouragement and must be viewed in the context of 'large step-out' wells evaluating giant stratigraphic prospects while seeking to establish the perimeter of the multiple Tertiary and Cretaceous play fairways both to the northeast and southwest of the prolific Stabroek block. Recent discoveries reported by Apache in Block 53 (Baja-1; 34m net light oil pay) and by CGX Energy Inc. in Corentyne Block (Kawa-1; 61m logged net hydrocarbon pay) have confirmed the potential for significant discoveries out-with of the main Stabroek-Block 58 trend.
In any case, the high-quality reservoirs of various stratigraphic ages encountered in the initial Kaieteur, Canje and Orinduik drilling campaigns indicates that these areas are capable of supporting deep-water developments when containing commercial volumes of light oil. Recent public domain presentation and commentary suggests that trap adequacy and hydrocarbon migration/timing are the key exploration risks inferred from these initial drilling results, out-with of the Stabroek Block sweet-spot. The current drilling interregnum provides an opportunity to fully digest the learnings of the initial drilling programs and the ongoing neighbourhood successes. These results together with the analysis and synthesis of the extensive well data gathering programs executed by the respective operators should improve understanding of the plays, reduce sub-surface risk and inform prospect selection for the next round of drilling on the Canje, Kaieteur and Orinduik blocks.
We remain hopeful that the geoscience learning curve combined with the portfolio effect provided by drilling an extended sequence of prospects in this prolific basin will win out over individual prospect risks to yield a commercial discovery. We look forward to the next drilling campaign across these blocks which is expected to commence as soon as the re-evaluation groundwork has been completed and drilling permits are in place. Environmental permitting applications, with respect to potential 12 well drilling programs on both the Kaieteur and Canje blocks, have already been submitted by the operator, ExxonMobil, and are under discussion with the Environmental Protection Agency (EPA).
In the meantime, the Westmount portfolio benefits from additional diversification via indirect exposure to the recently spudded Gazania-1 well, courtesy of EOG's 50% Working Interest in Block 2B, offshore South Africa. Block 2B is located in the south-eastern part of the emerging Orange Basin where exploration activity has been energised by the recently announced Venus-1 (TotalEnergies) and Graff-1 (Shell) giant light oil and associated gas discoveries, offshore Namibia. This Gazania-1 well is targeting a 300 MMbbls prospective oil resource in stacked pay up dip of the 1988 A-J1 light oil discovery.(7) The well is located circa 25kms offshore, in water depth of 150 meters, with an estimated total depth of approximately 2,800 meters. The well is being drilled using the Island Innovator semi-submersible rig, is estimated to take approximately 25 days to drill, with an option to drill a side-track well contingent on a discovery in the main target.
Investment portfolio summary
As of 30 June 2022 Westmount had a cash balance of GBP1.0M and is debt free.
As of 30 June 2022 Westmount continues to hold a total of 5,651,270 shares in JHI, representing approximately 7.2% of the issued common shares in JHI.
Westmount continues to hold a total of 567,185 common shares in CEC, representing approximately 5.3% of the issued share capital of CEC.
Westmount continues to hold 1,500,000 shares in EOG, representing approximately 0.44% of the common shares in issue.
Westmount continues to hold 89,653 shares in Ratio Petroleum representing approximately 0.04% of the issued share capital.
The complete investment portfolio is summarised in Table 1.
The reported financial loss for the period is primarily made up of a non-cash loss on financial assets held at fair value through the profit and loss, some of which is as a result of foreign exchange movements on the portfolio investments when valued at the period end.
On 14 March 2022 a proposed 'all paper' acquisition of JHI by EOG was announced, offering a consideration to JHI shareholders of 1.1994 new common shares in EOG for each JHI share held which in aggregate, upon completion, would lead to JHI shareholders holding approximately 34% of the enlarged issued share capital of EOG. However, this proposed transaction was subsequently terminated on 14 June 2022.(7)
Summary/Outlook
A dramatic recovery from the economic effects of the COVID pandemic, combined with the invasion of Ukraine and associated consequences, has resulted in surging oil and gas prices during the first half of 2022. While this environment has had a positive impact on industry sentiment, a change in the economic picture from mid-year due to spiking inflation, rising interest rates and gathering recessionary clouds have induced a softening in oil prices with a volatile outlook ahead. Energy security, energy system resilience and energy affordability have now become key considerations for governments and policy makers in the face of dawning recognition that overreliance on single sources of energy supply together with years of underinvestment in oil and gas are significant factors in the current energy supply-demand gap.
With at least 11 significant discoveries reported so far in 2022, the Guyana-Suriname basin continues to be a global hotspot for exploration activity. An industry focus on 'advantaged barrels' resulting from the unique combination of prospect sizes, reservoir quality, low carbon intensity and low breakeven metrics ($25/bbl-$35/bbl), is likely to see exploration drilling maintained offshore Guyana for some time to come. While the initial drilling outcomes from the Westmount portfolio have yet to deliver a standalone commercial discovery, the results to date provide encouragement and must be viewed in the context of initial 'large step-out' wells evaluating giant stratigraphic prospects while seeking to establish the perimeter of the multiple play fairways both to the northeast and southwest of the prolific Stabroek block.
We are also heartened by the industry's continuing appetite for exploration acreage in the Guyana-Suriname basin in spite of the mixed drilling results to date out-with of the Stabroek block - such as the Hess 5% farm-in on the Kaieteur Block (post Tanager-1) and the award of 3 blocks in the Surinamese Shallow Offshore Bid Round 2020/21 to Chevron (Block 5 - subsequently, farmed into by Shell) and TotalEnergies + Qatar Petroleum (Blocks 6 and 8). Furthermore, the applications for environmental authorisation submitted to the Guyanese EPA by ExxonMobil the operator of the Canje and Kaieteur blocks augurs well for potentially extensive new drilling programs on these blocks after the re-evaluation and permitting groundwork is completed.
Westmount's strategy remains one of seeking value creation for shareholders via exposure to high impact drilling outcomes. While our primary focus remains the Guyana-Suriname basin we are open to other opportunities that make sense for our shareholders. Our primary investee companies CEC, JHI and EOG are well funded for participation in near term drilling opportunities and we are excited by our immediate exposure to the additional portfolio diversification offered by EOG's participation in Gazania-1, a 300 MMbbl light oil prospect, in the emerging Orange Basin, South Africa. Furthermore, possible consolidation manoeuvres may bring book value realignment while offering risk diversification and exposure to multiple additional high impact drilling events. In this context, and in spite of the access challenges, your Board remains focused on investment opportunities and deployment of capital that gives additional exposure to drilling of high value prospects. There are likely to be more consolidation opportunities amongst the junior players within the Guyana-Suriname Basin, as exploration matures and in response to risk management demands of investor capital. In the meantime, we look forward to the outcome of the Gazania-1 well in South Africa.
GERARD WALSH
Chairman
31 October 2022
Notes
(1) TotalEnergies Energy Outlook 2022
2ExxonMobil 2022 Investor Day Presentation.
(3) Hess 2(nd) Quarter 2022 Conference Call Remarks
(4) CGX Energy Inc. News Releases 2 March 2022 and 4 March 2022.
(5) APA Corporation News Releases 29 July, 29 September and 16 November 2021; 21 February, 21 June and 23 August 2022.
(6) Hess 3rd Quarter 2022 Conference Call Remarks
(7) Eco (Atlantic) Oil & Gas Ltd. News Releases 14 March, 14 June and 12 August 2022.
For further information, please contact:
Westmount Energy Limited www.westmountenergy.com David King, Director Tel: +44 (0) 1534 823059
Anita Weaver
Cenkos Securities plc ( Nomad and Broker) Tel: +44 (0) 20 7397 8900
Nicholas Wells / Neil McDonald / Pete Lynch
DIRECTORS' REPORT
FOR THE YEARED 30 JUNE 2022
The Directors present their annual report and the audited financial statements of Westmount Energy Limited (the "Company") for the year ended 30 June 2022.
PRINCIPAL ACTIVITIES
The principal activity of the Company is, and continues to be, an energy investment company. Development of the Company's activities and its prospects are reviewed in the Chairman's Review on pages 3 to 8.
The Company was incorporated in Jersey on 1 October 1992 under the Companies (Jersey) Law 1991, as amended, and is a public company with registered number 53623. The Company is listed on the London Stock Exchange Alternative Investment Market ("AIM"). On 1 December 2020 the Company commenced cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol "WMELF".
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the date of this report were as follows:
Hot Features
Premium
Shares held at Options held
at
30 June 2022 30 June 2022
G Walsh (Chairman) 11,933,565 500,000
D R King - 250,000
T P O'Gorman 4,650,000 250,000
D Corcoran 5,250,000 1,250,000
RESULTS AND DIVIDS
The result for the year is set out on page 19 in the Statement of Comprehensive Income. The Directors do not recommend the payment of a dividend in respect of these financial statements (2021: GBPNil).
The Directors acknowledge the continued outbreak of Coronavirus ("COVID-19") and its potentially adverse economic impact. The Directors consider that at this stage the Company is not experiencing any major disruption to its business model from COVID-19 nor its effect on the oil and capital markets. The Directors will continue however, to closely monitor the ongoing impact of COVID-19 on the Company's operations.
During the year, Ukraine was invaded by the Russian military. This had an immediate impact on the global economy due to sanctions being imposed on Russia. Oil and gas prices have risen significantly and there have been restrictions on the exportation of goods from both the Ukraine and Russia. In preparing these financial statements, these uncertainties have been considered throughout. At the date of signing these financial statements it remains to be seen what impact this will have on the EU economy and the property markets. The Directors will continue to monitor the situation on a regular basis.
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman , age 59, a Swiss resident, is a member of the Chartered Institute of Management Accountants and has been involved in financing oil and gas companies for over 20 years. Mr Walsh maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector.
David R King , age 64, a Jersey resident, is a Fellow of the Institute of Chartered Accountants in England and Wales and has over 25 years' experience in capital markets and cross border structuring gained from senior positions in a number of offshore jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg and Jersey. He is an experienced professional Non-Executive Director and is regulated personally by the Jersey Financial Services Commission. He maintains his knowledge and skills via fulfilment of regular continuing professional development obligations and by close monitoring of significant market activities within the sector. Mr King acts as an independent director and oversees the efficient operation of Company Secretarial, Registrar and Administrative operations of the Company.
Thomas P O'Gorman , age 70, a Northern Ireland resident, is a long term investor in the resource sector and is the former Chairman of Cove Energy Plc (formerly Lapp Platts Plc) who has been involved in financing oil and gas companies for over 40 years. Mr O'Gorman maintains his knowledge and skills via direct contact with senior industry investors and other operators, and via monitoring of significant market activities within the global energy sector.
Dermot Corcoran , age 63, a Republic of Ireland resident, is a petroleum geologist and geophysicist, with more than 30 years' experience working with both major and minor hydrocarbon exploration companies globally. Mr Corcoran has wide experience in technical and commercial aspects of petroleum exploration and production, gained from employment and investment experience in Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and the USA. Mr Corcoran maintains his knowledge and skills via direct contact with senior industry investors and other operators, attendance and engagement at industry conferences and seminars and via monitoring of significant market activities within the global energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate Services
Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey) Limited,
has indicated its willingness to continue in office, and a resolution
that it is re-appointed will be proposed at the next annual general
meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the Directors' Report
and the financial statements in accordance with applicable law
and regulations.
Jersey Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance
with International Financial Reporting Standards as adopted by
the European Union (IFRS) and applicable law. Under Company law
the Directors must prepare financial statements that give a true
and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. In preparing these
financial statements, the Directors are required to:
* select suitable accounting policies and then apply
them consistently;
* make judgements and accounting estimates that are
reasonable and prudent;
* whether the financial statements have been prepared
in accordance with IFRS as adopted by the European
Union; and
* prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper accounting records
that are sufficient to show and explain the Company's transactions
and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial
statements comply with the Companies (Jersey) Law 1991. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit
information of which the Company's auditor is unaware and each
Director has taken all the steps that he ought to have undertaken
as a director in order to make himself aware of any relevant audit
information and to establish that the Company's auditor is aware
of that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's
website. The Company's website is maintained in compliance with
AIM Rule 26 and the applicable OTCQB Market standards.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with all of the
above requirements in preparing these financial statements.
On behalf of the Board.
D R KING
Director
31 October 2022
CORPORATE GOVERNANCE
The Board have adopted the Quoted Companies Alliance Corporate Governance Code ("the QCA Code") following the London Stock Exchange's requirement for AIM listed companies to adopt and comply with a recognised corporate governance code.
Strategy and Business Model
The strategy of the Company is to invest in and provide follow on capital to small and medium sized companies which have significant growth possibilities operating in the oil and gas sector. Members of the Board have specialist knowledge and experience in the upstream sector of the oil and gas industry (gained from extensive investing activity over a number of decades) allowing them to identify projects and growth companies with potentially higher returns, commensurate with acceptable levels of risk. The Company undertakes extensive due diligence on potential investment opportunities and monitors performance of its investments via close contact with the companies concerned and analysis of their public announcements and presentations. In common with other investment companies in this sector, access as a minority shareholder to projects and valuable investments is challenging but the Board is confident of its ability to continue to source attractive investment opportunities given close relationships with a number of companies and their management teams, and recognition of the Board's experience and strong network.
Shareholder Relations
The Company engages closely with its principal shareholders, a number of whom are Directors of the Company, primarily via face-to-face meetings and publishes announcements of significant activity consistent with market requirements. Shareholders receive annual and half-year financial statements and are invited to the Company's Annual General Meeting. Contact details for the Company are maintained on the website and on Regulatory News Service announcements. The Board seeks to build strong relationships with its institutional shareholders which are managed by the Chairman and supported by other members of the Board.
Gerard Walsh, Chairman, and Dermot Corcoran, Director, are primarily responsible for shareholder liaison, and can be contacted via the Contact Page on the Company's website.
Stakeholder and Social Responsibilities
The Board has identified its key stakeholders as being its shareholders and investee companies, given it has no employees and a small range of contracted service providers. It maintains contact with shareholders, of whom a significant proportion are Directors, via Regulatory News Service and periodic feedback from these parties. Contact with investee companies is operated via the Chairman and individual Board directors responsible for the relevant investment recommendation, and is geared to key operational, project and transactional cycles identified for the company concerned.
Risk Management
The Company actively monitors and manages risk in its activities, principally through oversight and operation of its investment portfolio. The Company identifies key risks in all of its investments during the selection and due diligence cycle, and subsequent recommendations for investment by the Company consider for each proposal a range of risks and mitigating factors. Identification of these risks is achieved by direct engagement with the companies in which Westmount seeks to invest, close analysis of their market opportunities and threats, combined with detailed knowledge of the market sector where they operate and their competitors.
Board Composition, Evaluation and Decision Making
The Board comprises three shareholder Directors (including the Chairman Gerard Walsh) and one Non-Executive Director (David King) resident in Jersey, who is considered to be independent.
The Company deviates from the requirements of the QCA Code in that it has only one independent non-executive director. The Directors consider that the structure of the Board is appropriate and proportionate for the business at this stage of the Company's growth, and that the Independent Director, in conjunction with the Company's Nominated Adviser, provides appropriate challenge to the executive directors on all corporate governance matters. The Board intends to keep all aspects of its corporate governance - independence and the balance of executive and non-executive roles in particular - under review going forward.
Each of the four directors has considerable experience in their respective fields and act collectively in all decision making of the Company. The Board is satisfied that it has a suitable balance between independence on the one hand and knowledge of the Company's activities, to allow it to properly discharge its responsibilities and duties. Directors are expected to use their judgement and experience to challenge and assess the appropriateness of operations and decision making at all times.
The Board has met three times this financial year and Directors each dedicate between 12 and 150 days' time to the Company per annum.
The Board regularly takes advice from its Nominated Advisor, Cenkos Securities plc, and other external advisors (principally its external lawyers) in relation to periodic investment opportunities and fund raising.
The Board completes an annual self-evaluation of its performance based on externally determined guidelines appropriate to the composition of the Board and the Company's operation, including Board Sub Committees. The scope of the self-evaluation exercise will be re-assessed each year to ensure appropriate depth and coverage of the Board's activities consistent with corporate best practice. The Board has adopted a board effectiveness questionnaire, which assesses the composition, processes, behaviours and activities of the board through a range of criteria, including board size and independence, mix of skills and experience, and general corporate governance considerations in line with the QCA code.
Given the stage of the business' maturity, the responsibilities of a nomination committee are delegated to the Board, and there are no formal succession planning processes in place. The Board intends to keep this under review as the business develops.
Corporate Culture
Westmount Energy supports the growing awareness of social, environmental and ethical matters when considering business practices. These statements provide an outline of the policies in place that guide the Company and its employees when dealing with social, environmental and ethical matters in the workplace.
Code of Conduct
Westmount Energy maintains and requires the highest ethical standards in carrying out its business activities in regards to dealing with gifts, hospitality, corruption, fraud, the use of inside information and whistle-blowing.
Westmount Energy maintains a zero-tolerance policy towards bribery and corruption.
Equal Opportunity and Diversity
Westmount Energy promotes and supports the rights and opportunities of all people to seek, obtain and hold employment without discrimination.
It is our policy to make every effort to provide a working environment free from bullying, harassment, intimidation and discrimination on the basis of disability, nationality, race, sex, sexual orientation, religion or belief.
Joint Venture Partners, Contractors and Suppliers
Westmount Energy is committed to being honest and fair in all its dealings with partners, contractors and suppliers.
Procedures are in place to ensure that any form of bribery or improper behaviour is prevented from being conducted on Westmount Energy's behalf by joint venture partners, contractors and suppliers. Westmount Energy also closely guards information entrusted to it by joint venture partners, contractors and suppliers, and seeks to ensure that it is never used improperly.
Operating Responsibility and Continuous Improvement
Westmount Energy adopts an environmental policy which sets standards that meet or exceed industry guidelines and host government regulations. This is reviewed on a regular basis. Wherever we operate we will develop, implement and maintain management systems for sustainable development that will strive for continual improvement.
Westmount Energy is committed to maintaining and regularly reviewing its Health and Safety and Environmental Policies.
Periodic feedback from stakeholders, as described in relation to Stakeholder and Social Responsibilities (above), allows the Board to monitor the culture of the Company, as well as its ethical values and behaviours.
Governance Structures
The Board operates to manage and direct the affairs of the Company via close contact between Board members and through both regular scheduled and ad-hoc Board meetings. The Board aims to meet regularly with a timetable set by the external Company Secretary with formal agendas and papers delivered in advance supporting key matters for consideration or approval. Additionally, contact is maintained between the directors via email and telephone given the geographic separation of the Board.
Mr Walsh as Chairman is responsible for setting the strategy of the Company and maintaining performance of the Board in line with the broad objectives set in that strategy. He is responsible for liaison with key stakeholders, including shareholders and prospective investee companies, and also with advisers and regulatory authorities.
Mr King, as a Jersey resident, maintains close contact with the Company Secretary and other contracted service providers from Jersey. The Board does not operate separate sub-committees (Audit, Remuneration or Nomination) given its small size and close contact for key decisions. The Company does not plan to establish new sub-committees for the foreseeable future.
The Board retains full authority for the Company such that all decisions on behalf of the Company are reserved for the Board.
Communication with Stakeholders
The Company communicates with shareholders through the Annual Report and Audited Financial Statements, annual and half year results announcements, the Annual General Meeting, and periodic meetings with significant institutional shareholders and analysts.
Corporate information (including all Company publications and announcements) is available to all shareholders, prospective investors and the public and is maintained on the Company's website, www.westmountenergy.com .
In the last 12 months there were no votes of shareholders where a significant proportion voted against a resolution.
INDEPENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF WESTMOUNT ENERGY LIMITED
Opinion
We have audited the financial statements of Westmount Energy Limited (the 'Company') as at and for the year ended 30 June 2022 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, Statement of Changes in Equity, the Statement of Cash Flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards ('IFRSs') as adopted by the European Union and the requirements of the Companies (Jersey) Law 1991.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's affairs as at 30 June 2022 and of its loss for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and -- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Jersey, including the Financial Reporting Council's Ethical Standard as applied to listed entities, and we have fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
An overview of the scope of our audit
During our audit planning, we determined materiality and assessed the risks of material misstatement in the financial statements including the consideration of where directors made subjective judgements, for example, in respect of the assumptions that underlie significant accounting estimates and their assessment of future events that are inherently uncertain. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole taking into account the Company, its accounting processes and controls and the industry in which it operates.
Emphasis of matter
We draw your attention to note 7 and note 14 of the financial statements, which include unlisted investments held by the Company and carried at GBP6,852,817 (2021: GBP13,989,918) based on Directors' valuations. These are Level III investments and have been valued based on the recent sales price of the investments and/or using relevant market proxies where available. The Directors have also considered market expectations of future performance of the entity's industry sector, in particular known interest in the area of current exploration, in arriving at their valuations. Our audit opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
-- Valuation of Investments. The valuation of the Company's investments is a key driver of the Company's investment return and investments represent a material proportion of the Company's financial assets. The relevant accounting policies and investment composition are discussed in note 2 and note 7, respectively, to the financial statements.
The investments represent listed and unlisted equity instruments amounting to GBP0.41 million and
GBP6.9 million, respectively, as at 30 June 2022. The identified risk predominantly relates to the unquoted investment which valuation carries a greater degree of judgement by the directors and has been valued based upon the price of recent investments, a valuation basis included in the International Private Equity and Venture Capital Guidelines (IPEVC Guidelines).
Our main audit procedures to address the identified risk in respect of the unlisted investment were (a) we discussed with management their unlisted valuation methodology, and assessed the recognition and measurement of the unlisted investment held for compliance with IFRSs, and whether it had been accounted for in accordance with the stated accounting policy and with IPEVC Guidelines; (b) we substantiated the nature and background of recent transactions which had
been used as the basis of the valuation. We have not identified any material issues from the completion of the above procedures; and (c) where the price of recent transaction do not coincide to the Company's year-end, we have performed independent research about events or conditions that may indicate the need to recalibrate the price to take into account the impact of such event or condition.
-- Risk of management override of controls. In accordance with ISAs (UK), we are required to consider the risk of management override of internal controls. Due to the unpredictable nature of this risk, we are required to assess it as a significant risk requiring special audit consideration.
Our audit work included, but was not restricted to, specific procedures relating to the risk that are required by ISA (UK) 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, which includes the testing of journal entries, evaluation of judgements and assumptions in management's estimate, and test of significant transactions outside the normal course of business. We have not identified any material issues from the completion of the above procedures.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included understanding the nature of the Company, its business model, system of internal control and related risks including the relevant impact of the COVID-19 pandemic to the business, reviewing the performance of the underlying investments, critically assessing the key assumptions made by management including its appropriateness in the context of the financial reporting framework, and evaluating the directors' plans for future actions in relation to their assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from material misstatement we define materiality as the level of misstatement that would probably influence the economic decisions of a reasonably knowledgeable person.
We have used approximately 2% of gross assets rounded down, or GBP165,000 (2021: GBP313,000) which reflects the fact that this is an investment fund where its market value is determined predominantly by its gross asset value.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the chairman's review or the directors' report.
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept, or -- returns adequate for our audit have not been received from branches not visited by us; or -- the financial statements are not in agreement with the accounting records and returns; or -- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities with regard to the financial statements set out on page 10, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit in respect of fraud, are to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the Company.
Our approach was as follows:
-- We obtained an understanding of the legal and regulatory requirements applicable to the Company and considered that the most significant but not limited to the Companies (Jersey) Law 1991, AIM Rule 26 and the applicable OTCQB Market standards. We also reviewed the laws and regulations applicable to the Company that has indirect impact to the financial statements.
-- We obtained an understanding of how the Company complies with these requirements by discussions with management and those charged with governance.
-- We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
-- We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
-- We reviewed the compliance reports and minutes of the meeting to see whether there is non-compliance reported to management and those charged with governance.
-- Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's shareholders as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Jeff Vincent
For and on behalf of Moore Stephens Audit & Assurance (Jersey) Limited
1 Waverley Place
Union Street
St Helier Jersey
Channel Islands JE4 8SG
31 October 2022
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2022
Year ended Year ended
30 June 30 June
2022 2021
Notes GBP GBP
Net fair value losses on financial
assets held at fair value through
profit or loss 7 (7,203,727) (692,288)
Net fair value gains on financial
liabilities held at fair value through
profit or loss
Finance income 10 - 103,205
Finance costs 133 -
Administrative expenses 6 - (33,702)
4 (247,627) (267,397)
Foreign exchange gains/(losses) 23,971 (100,160)
Share options expense 13 - (25,877)
Operating loss (7,427,250) (1,016,219)
Loss before tax (7,427,250) (1,016,219)
Tax 3 - -
Loss after tax (7,427,250) (1,016,219)
Other comprehensive income - -
------------- --------------
Total comprehensive loss for the
year (7,427,250) (1,016,219)
============= ==============
Basic earnings per share (pence)
continuing and total operations 5 (5.16) (0.72)
------------- --------------
Diluted earnings per share (pence)
continuing and total operations 5 (5.16) (0.69)
------------- --------------
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
As at As at
30 June 30 June
2022 2021
Notes GBP GBP
ASSETS
Non-current assets
Financial assets held at fair value
through profit or loss 7 7,261,904 14,465,631
------------------ --------------
7,261,904 14,465,631
------------------ --------------
Current assets
Other receivables and prepayments 8 10,146 4,441
Cash and cash equivalents 9 1,003,090 1,218,922
------------------ --------------
1,013,236 1,223,363
------------------ --------------
Total assets 8,275,140 15,688,994
================== ==============
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 11 52,930 39,534
------------------ --------------
52,930 39,534
------------------ --------------
Total Liabilities 52,930 39,534
------------------ --------------
EQUITY
Stated capital 12 16,652,482 16,652,482
Share based payment reserve 13 469,670 469,670
Retained earnings (8,899,942) (1,472,692)
------------------ --------------
Total equity 8,222,210 15,649,460
------------------ --------------
Total liabilities and equity 8,275,140 15,688,994
================== ==============
These financial statements were approved and authorised for issue
by the Board of Directors on 31 October 2022 and were signed on
its behalf by:
D R King
Director
31 October 2022
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2022
Stated Share-based Retained Total
Notes capital payment earnings equity
reserve
GBP GBP GBP GBP
As at 1 July 2020 13,955,623 443,793 (456,473) 13,942,943
Comprehensive income
Total Comprehensive
loss for the year ended
30 June 2021 - - (1,016,219) (1,016,219)
Share issue 12 2,696,859 - - 2,696,859
Transactions with owners
Share options credit 13 - 25,877 - 25,877
As at 30 June 2021 16,652,482 469,670 (1,472,692) 15,649,460
----------- -------------- ------------ ------------
Comprehensive income
Total Comprehensive
loss for the year ended
30 June 2022 - - (7,427,250) (7,427,250)
As at 30 June 2022 16,652,482 469,670 (8,899,942) 8,222,210
----------- -------------- ------------ ------------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2022
Year ended Year ended
30 June 30 June
2022 2021
Notes GBP GBP
Cash flows from operating activities
Loss for the year (7,427,250) (1,016,219)
Adjustments for:
Net loss on financial assets at fair
value through profit or loss 7,203,727 692,288
Net gain on financial liabilities
at fair value through profit or loss - (103,205)
Interest on borrowings - 33,702
Share options expense/(credit) 13 - 25,877
Movement in other receivables and
prepayments (5,704) (4,441)
Movement in trade and other payables 13,395 (6,874)
Proceeds from sale of investments 7 - 356,011
Purchase of investments 7 - (737,334)
------------ ------------
Net cash used in operating activities (215,832) (760,194)
------------ ------------
Cash flows from financing activities
Repayment of convertible loan notes 10 - (456,548)
Net cash used in financing activities - (456,548)
Net decrease in cash and cash equivalents (215,832) (1,216,742)
------------ ------------
Cash and cash equivalents at beginning
of year 1,218,922 2,435,664
Cash and cash equivalents at end
of year 9 1,003,090 1,218,922
------------ ------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL
FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an energy
investment company. The investment strategy of the Company is to
invest in and provide follow on capital to small and medium sized
companies that have significant growth possibilities.
The Company was incorporated in Jersey on 1 October 1992 under the
Companies (Jersey) Law 1991, as amended, and is a public company
with registered number 53623. The Company is listed on the London
Stock Exchange Alternative Investment Market ("AIM"). On 1 December
2020 the Company commenced cross-trading on the OTCQB Market in
New York, U.S., under the ticker symbol "WMELF".
Basis of Preparation
The financial statements are prepared on a going concern basis in
accordance with International Financial Reporting Standards as adopted
by the European Union ("IFRS") and applicable legal and regulatory
requirements of the Companies (Jersey) Law 1991. The financial statements
have been prepared under the historical cost convention as modified
by the valuation of financial assets held at fair value through
profit or loss.
The Directors are satisfied that the Company has sufficient liquidity
to meet its operational expenditure and obligations from the date
of approval of the financial statements. The Directors monitor the
income and expenditure of the Company and have concluded that, at
the time of approving the financial statements of the Company, there
is a reasonable expectation that the Company has adequate resources
to continue in operational existence for the foreseeable future.
Thus they have adopted the going concern basis of accounting in
preparing the annual financial statements.
Ukraine invasion
During the year ended 30 June 2022 Ukraine was invaded by the Russian
military. This had an immediate impact on the global economy due
to sanctions being imposed on Russia. Oil and gas prices have risen
significantly and there have been restrictions on the exportation
of goods from both the Ukraine and Russia. In preparing these financial
statements, these uncertainties have been considered throughout.
At the date of signing these financial statements it remains to
be seen what impact this will have on the EU economy and the property
markets. The Directors will continue to monitor the situation on
a regular basis.
COVID-19
The Directors acknowledge the continued outbreak of Coronavirus
("COVID-19") and its potentially adverse economic impact. The Directors
consider that at this stage the Company is not experiencing any
major disruption to its business model from COVID-19 nor its effect
on the oil and capital markets. The Directors will continue however,
to closely monitor the ongoing impact of COVID-19 on the Company's
operations.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in the
preparation of these financial statements are summarised below.
These accounting policies have been used throughout all periods
presented in the financial statements.
New standards, amendments and interpretations to existing standards
that are effective in the current year
There are no standards, amendments to standards or interpretations
that are effective for annual periods beginning on 1 July 2021 that
have a material effect on the nancial statements of the Company
.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
2. ACCOUNTING POLICIES (continued)
New standards, amendments and interpretations to existing standards
that are not yet effective and have not been adopted early by the
Company
At the date of authorisation of these financial statements there
are no other standards that are not yet effective and that would
be expected to have a material impact on the Company in the current
or future reporting periods and on foreseeable future transactions.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and the exercise of judgement
by management while applying the Company's accounting policies in
relation to the value of options issued and derivative financial
instruments, as set out in notes 10, 13 and 14. Derivative financial
instruments, which are embedded in the convertible loan notes issued
by the Company, have been presented separately from the host contract.
The bifurcation of the embedded derivative financial instruments
requires judgement by management to estimate the fair value of the
derivatives on initial recognition of the financial instrument.
These estimates are based on the management's best knowledge of
the events which existed at the date of issue of the financial statements
and at the statement of financial position date however, the actual
results may differ from these estimates.
Financial assets at fair value through profit and loss that are
not listed have been valued in accordance with IFRS using the International
Private Equity and Venture Capital ("IPEVC") Guidelines and information
received from the investment entity. The inputs to value these assets
require significant estimates and judgements to be made by the Directors.
The Directors have considered the sensitivity of the valuations
as detailed in note 14.
Functional and presentation currency
The functional currency of the Company is United Kingdom Pounds
Sterling ("Sterling"), the currency of the primary economic environment
in which the Company operates. The presentation currency of the
Company for accounting purposes is also Sterling.
Foreign currency monetary assets and liabilities are translated
into Sterling at the rate of exchange ruling on the last day of
the Company's financial year. Foreign currency non-monetary items
that are measured at fair value in a foreign currency are translated
into Sterling using the exchange rates at the date when the fair
value was determined. Foreign currency transactions are translated
at the exchange rate ruling on the date of the transaction. Gains
and losses arising on the currency translation are included in administrative
expenses in the Statement of Comprehensive Income in the year in
which they arise.
Financial instruments
Financial assets and financial liabilities are recognised when the
Company becomes party to the contractual provisions of the instrument.
(a) Classification
The Company classifies its financial assets in the following measurement
categories:
* those to be measured subsequently at fair value
(either through other comprehensive income or through
profit or loss); and
- those to be measured at amortised cost.
The classification depends on the entity's business model for managing
the financial assets and the contractual terms of the cash flows.
The Company determines the classification of its financial assets
and financial liabilities at initial recognition.
Financial liabilities which are not financial liabilities held at
fair value through profit or loss are classified as other financial
liabilities and held at amortised cost.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
2. ACCOUNTING POLICIES (continued)
(b) Recognition and measurement
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognised immediately
in the statement of comprehensive income.
Subsequent to initial recognition, financial assets at fair value
through profit or loss are re-measured at fair value. For listed
investments, fair value is determined by reference to stock exchange
quoted market bid prices at the close of business at the end of
the reporting year, without deduction for transaction costs necessary
to realise the asset. For non-listed investments fair value is determined
by using recognised valuation methodologies, in accordance with
the IPEVC Guidelines. Gains or losses arising from changes in the
fair value of financial assets at fair value through profit or loss
are presented in the statement of comprehensive income in the period
in which they arise.
Subsequent measurement of the Company's debt instruments depends
on the model for managing the asset and the cash flow characteristics
of the asset.
The Company measures debt instruments at amortised cost if they
are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured
at amortised cost. The Company recognises any impairment loss on
initial recognition and any subsequent movement in the impairment
provision in the statement of comprehensive income.
Debt instruments which do not represent solely payments of principal
and interest are measured at fair value through profit or loss.
Financial liabilities, which includes borrowings, are measured at
amortised cost using the effective interest method. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability
or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
Financial liabilities at fair value through profit or loss are re-measured
at fair value. The fair value of the derivative financial instruments
is determined by reference to stock exchange quoted market bid prices
at the close of business at the end of the reporting year, without
deduction for transaction costs incurred by the Company on realisation
of the liability, see note 10. Gains or losses arising from changes
in fair value of financial liabilities at fair value through profit
or loss are presented in the statement of comprehensive income in
the period in which they arise.
(c) Impairment
Under IFRS 9, the impairment model requires the recognition of impairment
provisions based on expected credit losses ("ECL") rather than only
incurred credit losses as was the case under IAS 39. IFRS 9 permits
a simplified approach to trade and other receivables which allows
the Company to recognise the loss allowance at initial recognition
and throughout its life at an amount equal to lifetime ECL. ECL
are a probability-weighted estimate of credit losses. A credit loss
is the difference between the cash flows that are due to an entity
in accordance with the contract and the cash flows that the entity
expects to receive discounted at the original effective interest
rate. ECL consider the amount and timing of payments, thus a credit
loss arises even if the entity expects to be paid in full but later
than when contractually due.
The historical default rate has been considered by the Directors
and there is no history of bad debt. Under IFRS 9 ECL Model as well,
which is forward looking, all factors that could contribute to expected
future losses have been considered by the Directors and there is
no expectation of credit loss in the future. As such the Directors
concluded that there is no material impact on the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
2. ACCOUNTING POLICIES (continued)
(d) Derecognition
A financial asset or part of a financial asset is derecognised when
the rights to receive cash flows from the asset have expired and
substantially all risks and rewards of the asset have been transferred.
The Company derecognises a financial liability when the obligation
under the liability is discharged, cancelled or expired.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on
call with banks and cash with broker. For the purpose of the Statement
of Cash Flows, cash and cash equivalents are considered to be all
highly liquid investments with maturity of three months or less
at inception.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Transaction costs associated
with the issuing of shares are deducted from stated capital. Retained
earnings include all current and prior period retained profits.
Shares are classified as equity when there is no obligation to transfer
cash or other assets.
Expenditure
The expenses of the Company are recognised on an accruals basis
in the Statement of Comprehensive Income.
Share options
Equity-settled share-based payment transactions are measured at
the fair value of the goods and services received unless that cannot
be reliably estimated, in which case they are measured at the fair
value of the equity instruments granted. Fair value is measured
at the grant date and is estimated using valuation techniques as
set out in note 13. The fair value is recognised in the Statement
of Comprehensive Income, with a corresponding increase in equity
via the share option account in profit or loss. When options are
exercised, the relevant amount in the share option account is transferred
to stated capital. When options expire, the Company does not subsequently
reverse the amounts already recognised for services received from
the Directors.
3. TAXATION
The Company is subject to income tax at a rate of 0%. The Company
is registered as an International Services Entity under the Goods
and Services Tax (Jersey) Law 2007 and a fee of GBP300 has been
paid, which has been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES
2022 2021
GBP GBP
Administration and consultancy fees 55,755 57,860
Advisory fees 26,922 41,240
Audit fees 16,636 15,500
Directors' fees 60,000 60,000
Legal and professional fees 20,853 37,194
Printing and stationery 20,720 4,564
Registered agent's fees 22,459 21,974
Other expenses 24,282 29,065
247,627 267,397
-------- --------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
5. EARNINGS PER SHARE 2022 2021
GBP GBP
Basic earnings per share (pence) (5.16) (0.72)
Diluted earnings per share (pence) (5.16) (0.69)
Current year loss
The calculation of diluted earnings per share is not required
this year as the loss for the year is not diluted. The calculations
have been left in for information.
The table below presents information on the profit attributable
to the shareholders and the weighted average number of shares
used in the calculating the basic and diluted earnings per
share.
2022 2021
Basic earnings per share GBP GBP
Loss attributable to the shareholders
of the Company (7,427,250) (1,016,219)
Diluted earnings per share
(Loss)/profit attributable to the shareholders
of the Company:
Used in calculating basic earnings per
share (7,427,250) (1,016,219)
Add interest expense - 33,702
Loss attributable to the shareholders
of the Company used in calculating diluted
earnings per share (7,427,250) (982,517)
------------ --------------
No. of shares No. of shares
Weighted average number of ordinary shares
used as the denominator in calculating
basic earnings per share 144,051,486 140,364,390
Adjustments for calculating of diluted
earnings per share:
Share options - 1,407,808
Convertible loan notes - -
-------------- --------------
Weighted average number of ordinary shares
and potential ordinary shares used as
the denominator in calculating diluted
earnings per share 144,051,486 141,772,198
-------------- --------------
Share options
The share options have been included in the determination of
the diluted earnings per share to the extent to which they
are dilutive.
750,000 share options were granted on 6 August 2020. These
were not included in the comparative calculation of diluted
earnings per share because they are antidilutive as at 30 June
2022. These potentially dilute earnings per share in the future
as they may not be exercised before their expiration date.
6 . FINANCE COSTS
The Company previously issued 10% convertible loan notes as set out in note 10. Interest was payable to each of the relevant Noteholders on the principal amount of the Loan Note for the time being outstanding at a rate calculated in accordance with the Instrument. The interest payable at 10% per annum on the Loan Notes held by any Noteholder can be converted into a corresponding number of new fully paid Ordinary Shares at the Noteholder Conversion Price when certain conditions within the Instrument are met.
On 31 March 2021 the remaining principal of GBP400,000 was repaid in full along with the accrued interest of GBP56,548.
The interest charge through the Statement of Comprehensive Income during the prior year was GBP33,702.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 2022 2021
GBP GBP
Equity investments
Argos Resources Ltd ("Argos") 17,400 27,300
Cataleya Energy Corporation ("Cataleya") 4,670,296 4,105,846
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 384,750 433,500
JHI Associates Inc ("JHI") 2,182,521 9,884,072
Ratio Petroleum Energy Limited Partnership
("Ratio") 6,937 14,913
Total investments 7,261,904 14,465,631
---------- -----------
Net changes in fair value of financial assets designated at
fair value through profit or loss
2022 2021
GBP GBP
Opening cumulative unrealised gain 1,604,358 2,191,024
Net unrealised movement (7,203,727) (586,666)
Cumulative unrealised (loss) / gain on financial
assets at fair value through profit or loss (5,599,369) 1,604,358
------------ ----------
2022 2021
GBP GBP
Unrealised loss (7,203,727) ( 586,666)
Realised loss on disposal of financial assets - (105,622)
Net changes in fair value of financial assets
at fair value through profit or loss (7,203,727) (692,288)
------------ -----------
On 30 June 2022, the fair value of the Company's holding of 1,000,000
(2021: 1,000,000) ordinary fully paid shares in Argos, representing
0.43% (2021: 0.43%) of the issued share capital of the company,
was GBP17,400 (2021: GBP27,300) (1.74p per share (2021: 2.73p per
share)). No shares were purchased or disposed of in the current
nor prior years.
On 30 June 2022, the fair value of the Company's holding of 1,500,000
(2021: 1,500,000) ordinary fully paid shares in Eco Atlantic, representing
0.44% (2021: 0.75%) of the issued share capital of the
company, was GBP384,750 (2021: GBP433,500) (25.65p per share (2021:
28.90p per share)). No shares were purchased or disposed of in
the current year nor prior years.
On 30 June 2022, the fair value of the Company's holding of 89,653
(2021: 89,653) ordinary fully paid shares in Ratio, representing
0.04% (2021: 0.04%) of the issued share capital of the Company,
was GBP6,937 (2021: GBP14,913) (7.74p per share (2021: 16.63p per
share)).
In November 2020 the Company disposed of all 1,200,000 shares in
Ratio for a consideration of GBP338,481 (excluding transaction
costs) representing 28.20p per share. In January 2021, the 89,653
Ratio Warrants were exercised and converted into ordinary shares
for a consideration of GBP27,378.
In November 2020 the Company sold 300,000 of the Ratio Warrants
for a consideration of GBP15,282 (excluding transaction costs)
(5.10p per warrant). In January 2021, the Company exercised its
remaining Ratio Warrants (89,653) in exchange for Ratio ordinary
shares for a consideration of GBP27,378 (30.54p per warrant).
On 30 June 2022, the Directors' estimate of the fair value of the
Company's holding of 567,185 (2021: 567,185) shares in Cataleya
was GBP4,670,296 (2021: GBP4,105,846) (GBP8.23 per share (2021:
GBP7.24)). No shares were purchased or disposed of during the current
nor prior years.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)
On 30 June 2022, the Directors' estimate of the fair value of the
Company's holding of 5,651,270 (2021: 5,651,270) shares in JHI
was GBP 2,182,521 (2021: GBP9,884,072) (GBP0.39 per share (2021:
GBP1.75 per share)). No shares were purchase or disposed of in
the current year.
During the prior year the Company purchased 2,087,500 ordinary
fully paid shares in JHI for a total consideration of GBP3,411,939
which included a share issue by the Company of 18,290,000 new nil
par value ordinary shares as part consideration for JHI shares
received during the prior year (see note 12).
8. OTHER RECEIVABLES AND PREPAYMENTS 2022 2021
GBP GBP
Prepayments 10,146 4,441
------- ------
9. CASH AND CASH EQUIVALENTS
2022 2021
GBP GBP
Cash at bank 465,501 681,066
Cash at broker 537,589 537,856
---------- ----------
1,003,090 1,218,922
---------- ----------
10 . DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS
The Company issued GBP1,600,000 10% convertible loan notes on 24
October 2018. The notes were convertible into ordinary shares of
the Company, at the option of the holder, or repayable on 31 March
2021. The conversion price was the higher of GBP0.08 per share
or a 25% discount on the volume weighted average price ("VWAP")
5 days prior to the repayment date.
Interest accrued up to and payable on 31 October 2019 may be converted
into shares, at the option of the Company, at a conversion price
of a 10% discount of VWAP 5 days prior to the payment date. Interest
accrued up to and payable on 31 October 2020 may be converted into
shares, at the option of the holder, at a conversion price of the
higher of GBP0.08 per share or a 25% discount of VWAP 5 days prior
to the payment date. On 31 October 2019 both the 1(st) interest
payment due (GBP67,447) and the early repayment of GBP260,000 principal
of the residual GBP660,000 of 10% p.a. convertible unsecured loan
notes was made.
On 18 March 2019 the Company repaid GBP940,000 of the principal
of the convertible loan notes, the interest accrued on the repaid
portion of the convertible loan note was waived by the holder.
On 31 March 2021 the remaining principal of GBP400,000 was repaid
in full along with the accrued interest of GBP56,548.
Interest Principal Total
GBP GBP GBP
Total borrowings at 30 June
2020 30,067 362,651 392,718
Repayment of convertible loan
notes - (400,000) (400,000)
Interest expense 33,702 - 33,702
Interest paid (56,548) - (56,548)
Movement in fair value on final
conversion (7,221) 37,349 30,128
--------- ---------- ----------
Total borrowings at 30 June
2021 - - -
--------- ---------- ----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
10. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
Interest Principal Total
GBP GBP GBP
Conversion rights measured
at fair value through profit
or loss
Opening balance at 1 July 2020 8,876 124,457 133,333
Initial recognition of conversion
rights from issue of convertible
loan notes - - -
Repayment of convertible loan
notes (cancellation of conversion
rights) - - -
Movement in fair value (8,876) (124,457) (133,333)
--------- ---------- ----------
Total derivative financial
instruments at 30 June 2021 - - -
--------- ---------- ----------
The initial fair value of the derivative portion of the convertible
loan notes was determined by the potential loss on ordinary shares
if converted on the date the convertible loan notes were issued.
The derivative financial instruments were recognised as a financial
liability measured at fair value through profit or loss. The remainder
of the proceeds was allocated to the liability which is subsequently
recognised on an amortised cost basis until extinguished on conversion
or maturity of the convertible loan notes.
11. TRADE AND OTHER PAYABLES 2022 2021
GBP GBP
Accrued expenses 52,930 39,534
------- -------
12. STATED CAPITAL
Allotted, called up and fully paid: Ordinary Ordinary shares
shares
No. GBP
1 July 2020 125,761,486 13,955,623
Additions 18,290,000 2,696,859
------------- ----------------
1 July 2021 144,051,486 16,652,482
Additions - -
------------- ----------------
At 30 June 2022 144,051,486 16,652,482
------------- ----------------
On 9 September 2020, in accordance with the terms of the JHI share
purchase agreements, the Company issued a total of 8,850,000 new
nil par value ordinary shares for 750,000 JHI shares. This represented
a non-cash transaction. The total valuation of the Company's share
issue was GBP1,304,933.
On 14 September 2020, in accordance with the terms of the JHI share
purchase agreements, the Company issued a total of 9,440,000 new
nil par value ordinary shares for 800,000 JHI shares. This represented
a non-cash transaction. The total valuation of the Company's share
issue was GBP1,391,928.
There were no share issues during the year ended 30 June 2022.
There were no share redemptions during the year ended 30 June 2022
(2021: GBPNil).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
13. SHARE-BASED PAYMENT RESERVE
2022 2021 2017
GBP GBP GBP
At 1 July 469,670 443,793 49,906
Share options expense - 25,877 3,000
At 30 June 469,670 469,670
-------- --------
On 6 August 2020 750,000 share options were granted with an exercise
price of 17.0 pence per share and an expiration date of 31 July
2023. The options issued on 3 January 2017 were extended on 1 November
2019 with a new expiry date of 31 December 2021.
The following assumptions were used to determine the fair value
of the options for 2021:
2021
Weighted average share price at grant date (pence)
15.00
Exercise price (pence) 17.0
Expected volatility (%) 45.8%
Average option life (years) 7.7
Risk free interest rate (%) 0.550%
The expected volatility is based on the historic volatility of
the Company's share prices over the last five years.
The number and weighted average exercise price of share options
are as follows:
2022 2022 2021 2021
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
(p) (p)
Outstanding at start
of the year 11.25 4,500,000 10.10 3,750,000
Granted during the
year - - 17.00 750,000
Expired during the - -
year (2,250,000) -
Exercised during the - - - -
year
Outstanding at end
of the year 15.00 2,250,000 11.25 4,500,000
---------- ------------ ---------- ------------
Exercisable at end
of the year 15.00 2,250,000 11.25 4,500,000
---------- ------------ ---------- ------------
2,250,000 of the options expired during the year (30 June 2021:
nil).
14. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial
risks: market risk (including foreign exchange risk, price risk
and interest rate risk), credit risk and liquidity risk. The Company's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects
on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling.
The Company is exposed to currency risk through its investments
in Cataleya, JHI and Ratio, and cash at bank. The Directors have
not hedged this exposure.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
14. FINANCIAL RISK (continued)
a) Market risk (continued)
i) Foreign exchange risk (continued)
Currency exposure as at 30 June: Assets and Assets and
net exposure net exposure
2022 2021
Currency GBP GBP
US Dollars 5,003,663 4,897,698
Canadian Dollars 2,047,350 9,271,921
Israeli Shekel 6,937 14,913
Total 7,057,950 14,184,532
------------------------- -------------------------
If the value of sterling had strengthened by 5% against all of
the currencies, with all other variables held constant at the reporting
date, the equity attributable to equity holders and the profit
for the period would have decreased by GBP342,988 (2021: GBP700,242).
The weakening of sterling by 5% would have an equal but opposite
effect. The calculations are based on the foreign currency denominated
financial assets as at year end and are not representative of the
period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows
of a financial instrument will fluctuate due to changes in market
prices. The Company is exposed to price risk on the investments
held by the Company and classified by the Company on the Statement
of Financial Position as at fair value through profit or loss.
To manage its price risk, management closely monitor the activities
of the underlying investments.
The Company's exposure to price risk is as follows: Fair value
GBP
Fair Value Through Profit or Loss,
as at 30 June 2022 7,261,904
Fair Value Through Profit or Loss,
as at 30 June 2021 14,465,631
With the exception of JHI and Cataleya, the Company's investments
are all publicly traded and listed on either the AIM, OTCQB or
the Tel Aviv Stock Exchange. A 30% increase in market price would
decrease the pre-tax loss for the year and increase the net assets
attributable to ordinary shareholders by GBP122,726 (2021: GBP142,714).
A 30% reduction in market price would have increased the pre-tax
loss for the year and reduced the net assets attributable to shareholders
by an equal but opposite amount. 30% represents management's assessment
of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI and Cataleya would decrease
the pre-tax loss for the year and increase the net assets attributable
to ordinary shareholders by GBP2,055,845 (2021: GBP4,196,975).
A 30% reduction in market price would have increased the pre-tax
loss for the year and reduced the net assets attributable to shareholders
by an equal but opposite amount. 30% represents management's assessment
of a reasonably possible change in the market price of JHI and
Cataleya based on the price of share purchases over the last two
years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to material
interest rate risk.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
14. FINANCIAL RISK (continued)
b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet commitments it has entered into with
the Company. The Directors do not believe the Company is subject
to any significant credit risk exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets
exposed to credit risk amounted to the following: 2022 2021
GBP GBP
Cash and cash equivalents 1,003,090 1,218,922
---------- ----------
The Company considers that all the above financial assets are not
impaired or past due for each of the reporting dates under review
and are of good credit quality.
c) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities
as they fall due. The Company's primary source of liquidity consists
of cash and cash equivalents and those financial assets which are
publicly traded and held at fair value through profit or loss and
which are deemed highly liquid.
The following table details the contractual, undiscounted cash
flows of the Company's financial liabilities
As at 30 June 2022 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 52,930 - - 52,930
--------------- ------------- ------------ -------
52,930 - - 52,930
--------------- ------------- ------------ -------
As at 30 June 2021 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 39,534 - - 39,534
39,534 - - 39,534
--------------- ------------- ------------ -------
Capital Management
The Company's objective when managing capital is to safeguard the
Company's ability to continue as a going concern in order to provide
optimum returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce cost of
capital.
In order to maintain or adjust the capital structure, the Company
may issue new shares, return capital to shareholders or sell assets.
The Company does not have any debt nor is the Company subject to
any external capital requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through
profit or loss and fair value is determined via one of the following
categories:
Level I - An unadjusted quoted price in an active market provides
the most reliable evidence of fair value and is used to measure
fair value whenever available. As required by IFRS 7, the Company
will
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
14. FINANCIAL RISK (continued)
Fair Value Estimation (continued)
not adjust the quoted price for these investments, (even in situations
where it holds a large position and a sale could reasonably impact
the quoted price).
Level II - Inputs are other than unadjusted quoted prices in active
markets, which are either directly or indirectly observable as
of the reporting date, and fair value is determined through the
use of models or other valuation methodologies.
Level III - Inputs are unobservable for the investment and include
situations where there is little, if any, market activity for the
investment. The inputs into the determination of fair value require
significant management judgment or estimation.
The following table shows the classification of the Company's financial
assets and liabilities:
Level I Level II Level III Total
GBP GBP GBP GBP
At 30 June 2022 409,087 - 6,852,817 7,261,904
At 30 June 2021 475,713 - 13,989,918 14,465,631
The Company has classified quoted investments as Level I, derivative
financial instruments as Level II and unquoted investments as Level
III. The Level III investment is at an early stage of development
and therefore has been valued based on the recent price of the investment.
The Directors have considered market expectations of future performance
of the entity's industry sector, in particular known interest in
the area of current exploration. As such, the Directors consider
that the recent price of the investment in Cataleya fairly reflects
the value of the investment as at 30 June 2022. Following a recently
completed transaction in JHI the Directors have used this price as
their basis for determining the Company's fair value investment in
JHI. There have been no movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown
below:
2022 2021
GBP GBP
At start of the year 13,989,918 10,943,867
Purchases - 3,411,939
Change in fair value (7,137,101) (365,888)
At end of the year 6,852,817 13,989,918
15. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2022 2021 2022 2021
Directors' Directors' Options Options
fees fees outstanding outstanding
GBP GBP
D R King 20,000 20,000 250,000 500,000
D Corcoran - - 1,250,000 1,750,000
G Walsh 20,000 20,000 500,000 1,000,000
T O'Gorman 20,000 20,000 250,000 750,000
M Bradlow
(resigned 11 April
2017) - - - 500,000
60,000 60,000 2,250,000 4,500,000
----------- ----------- ------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
15. DIRECTORS' REMUNERATION AND SHARE OPTIONS (continued)
At the year end the Company owed GBP10,000 (2021: GBP10,000) in outstanding
Directors' fees.
During the year consultancy fees of GBP23,694 (2021: GBP21,517) were
paid to D Corcoran.
On 6 August 2020, 750,000 share options were granted to D Corcoran
with an exercise price of 17.0 pence per share and an expiration
date of 31 July 2023. No options were granted during the current
year. No options were exercised during the current nor prior years.
The shares held by the Directors are declared in the Directors' report.
The Company does not employ any staff except for its Board of Directors.
The Company does not contribute to the pensions or any other long-term
incentive schemes on behalf of its Directors.
16. RELATED PARTIES
On 31 March 2021 the convertible loan notes plus accrued interest
were repaid in full in the sum of GBP456,548 consisting of GBP400,000
of residual principal and GBP56,548 of accrued interest. Details
of the convertible loan notes are disclosed in note 10. The convertible
loan notes were held by Mr Walsh.
Canaccord Genuity as a significant shareholder of the Company is
considered a related party under AIM rules. The Company paid GBP400
in Custody fees to Canaccord Genuity for the year (2021: GBP391).
The shares held by the Directors are declared in the Directors' report.
17. CONTROLLING PARTY
In the opinion of the Directors, the Company does not have a controlling
party.
18. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events
subsequent to the year-end that require adjustment or disclosure
in the financial statements.
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