TIDMINFT
Infinity Energy S.A.
("Infinity Energy" or the "Company")
Final Results for the 12 months ended 31 December 2016
The Directors of Infinity Energy are pleased to announce the audited results of
the Company for the year ended 31 December 2016.
The audited annual accounts for the year ended 31 December 2016 will shortly be
sent to shareholders and will also be available on the Company's website at
http://www.infinityenergy.eu.
For further information, please contact:
Infinity Energy S.A.
Gerwyn Williams Tel: +44 7889 677 397
Nomad
Cairn Financial Advisers LLP
Sandy Jamieson / James Caithie Tel: +44 207 213 0880
Joint-Broker
WH Ireland Limited
Paul Shackleton / Nick Prowting Tel: +44 207 220 1666
Joint-Broker
Peterhouse Corporate Finance Limited
Eran Zucker / Lucy Williams Tel: +44 20 7469 0930
CHAIRMAN'S STATEMENT
Infinity Energy became an Investing Company under the AIM Rules on 17 February
2012. On 18 March 2014, shareholders approved the new investing policy which
is to make investments and acquisitions, either through the issues of
securities or for cash, in quoted and non-quoted companies and their
securities, in the commodities sector with an emphasis on oil and gas service
sectors. Such investments include the provision of financing by way of
farm-ins, earn-ins, loans, equity or other forms of financing and investments
in and to companies in these sectors.
Following a decision by the board of the Company to cease it investment
activities in April 2017, the Company became an AIM cash shell under AIM rules.
John Killer
DIRECTORS' REPORT ON THE FINANCIAL STATEMENTS
The Directors are pleased to submit their annual management report and
financial statements for the year ended 31 December 2016.
For the purpose of filing with AIM, financial statements have been prepared and
presented using International Financial Reporting Standards ('IFRS') as adopted
by the European Union. The Company has elected, as allowed under Luxembourg
law, to produce financial statements using IFRS only and these are available at
the registered office and the Trade Registrar in Luxembourg.
Principal activity
The principal activity of the Company during the year under review was to make
investments and acquisitions, either through the issues of securities or for
cash, in quoted and non-quoted companies and their securities, in the
commodities sector with an emphasis on oil and gas and oil and gas service
sectors. Such investments include the provision of financing by way of
farm-ins, earn-ins, loans, equity or other forms of financing and investments
in and to companies in these sectors.
Review of business
During the period under review the Company was an Investing Company as defined
by AIM Rules.
On 1 June 2017 in accordance with Article 100 of the Luxembourg Companies Law,
the Shareholders of the Company resolved that it will continue to provide
financial support to the Company following the notification from the Board of
Directors that the Company had lost half of the corporate capital as at 31
December 2016. It was resolved by the Shareholders that the Company will not be
put into dissolution.
During the period, the Company was extended a loan facility of GBP (GBP) 400,000
by Gerwyn Llewellyn Williams a Director/Shareholder of the Company. The terms
of this loan and the basis on which it has been advanced are disclosed in the
notes to these financial statements.
Total operating costs for the period amounted to GBP (GBP) 312,899 (2015: GBP (GBP)
191,910). The Group losses for the year were GBP (GBP) 309,799 (2015 loss: GBP
(GBP) 189,058).
Post Balance Sheet events
On 16 March 2017, the Company raised GBP500,000 (before expenses) by way of a
placing of 555,558,200 new ordinary shares ("New Ordinary Shares") at a price
of GBP0.0009 per share.
On 5 April 2017, Gerwyn Llewellyn Williams, Company Director and Chief
Executive Officer, converted his convertible loan totalling GBP480,000 into new
ordinary shares in the Company at a conversion rate of GBP0.0013, equating to
369,230,769 new ordinary shares ("New Ordinary Shares"). Following this
conversion, Mr Williams held 472,003,497 ordinary shares in the Company.
On 10 April 2017, the Company raised GBP600,000 (before expenses) by way of a
placing of 461,542,700 new ordinary shares ("New Ordinary Shares") at a price
of GBP0.0013 per share.
At a board meeting of the Company held on 12 April 2017, it was decided that
the Company should cease its investment activities and instead focus on
completing a suitable reverse takeover transaction as soon as possible.
The Company is investigating a number of potential reverse takeover candidates
in the oil and gas sector.
The Company has now become an AIM Rule 15 cash shell, which means that the
Company must make an acquisition or acquisitions which constitute a reverse
takeover under Rule 14 of the AIM Rules by 12 October 2017, otherwise the
trading of the Company's shares on AIM will be suspended.
If the Company has not made an acquisition or acquisitions which constitute a
reverse takeover under Rule 14 of the AIM Rules within six months of such
suspension, the admission of the Company's shares to trading on AIM will be
cancelled.
On behalf of the Board
Gary Neville
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
(Expressed in GBP (GBP)) 2016 2015
Notes GBP (GBP) GBP (GBP)
Income
Interest 5 5,849 5,218
Total Net Income 5,849 5,218
Expenses
Directors Remuneration 6 (48,000) (43,000)
Administrative expenses 7 (239,487) (129,360)
Interest and financial charges 8 (25,412) (19,550)
Total Operating Expenses (312,899) (191,910)
Loss before taxation (307,050) (186,692)
Income tax 9 (2,749) (2,366)
Total comprehensive loss (309,799) (189,058)
Basic loss per share 10 (0.0008) (0.0005)
The accompanying notes 1 to 16 form an integral part of these financial
statements.
STATEMENT OF FINANCIAL POSTION
As at 31 December 2016
(Expressed in GBP (GBP)) 2016 2015
Notes GBP (GBP) GBP (GBP)
ASSETS
Non-current assets
Financial assets at fair value through 11 208,403 202,554
profit and loss
Total non-current assets 208,403 202,554
Current assets
Other receivables - -
Cash and cash equivalent 8,020 38,554
Total current assets 8,020 38,554
Total assets 216,423 241,108
EQUITY AND LIABILITIES
Capital and reserves
Share capital 12 506,719 486,719
Share premium 12 182,483 182,483
Accumulated losses (916,310) (727,252)
Loss for the year (309,799) (189,058)
Shareholders' equity (536,907) (247,108)
Current liabilities
Trade and other payables 13 135,330 78,216
Provisions for other liabilities and 158,000 110,000
charges
Total current liabilities 293,330 188,216
Non-current liabilities
Convertible loan 14 460,000 300,000
460,000 300,000
Total equity and liabilities 216,423 241,108
The accompanying notes 1 to 16 form an integral part of these financial
statements.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2016
(Expressed in GBP (GBP)) 2016 2015
Notes GBP (GBP) GBP (GBP)
OPERATING ACTIVITIES
Operating expenses paid (190,534) (138,832)
Net cash flows applied to operations (190,534) (138,832)
FINANCING ACTIVITIES
Funds raised through issuance of shares 12 - -
Funds received via convertible loan 14 160,000 -
Net cash inflows from financing activities 160,000 -
Decrease in cash & cash equivalents (30,534) (138,832)
Cash and cash equivalents:
- balance at beginning of the year 38,554 177,386
- balance at end of the year 8,020 38,554
Decrease in cash & cash equivalents (30,534) (138,832)
Cash and cash equivalents are represented
by:
Cash at bank and in hand 8,020 38,554
The accompanying notes 1 to 16 form an integral part of these financial
statements.
STATEMENT OF CHANGES IN EQUITY
Called up share Share premium
capital Losses Total
(Expressed in GBP Notes
(GBP))
At 31 December 2014 486,719 182,483 (727,252) (58,050)
Comprehensive
Income
Loss for the year - - (189,058) (189,058)
At 31 December 2015 486,719 182,483 (916,310) (247,108)
Comprehensive
Income
Loss for the year - - (309,799) (309,799)
Transactions with
owners
Issuance of shares 12 20,000 - - 20,000
At 31 December 2016 506,719 182,483 (1,226,109) (536,907)
The accompanying notes 1 to 16 form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1.General information
Infinity Energy S.A. (the 'Company') was incorporated under the laws of
Luxembourg on 6th July 1999 by notary act prepared by Maitre Alex Weber, notary
residing in Luxembourg. The act was published in the legal gazette, the
Mémorial C N° 723 of 29th September 1999. The Company is registered under
number B 70673 at the Register of Commerce and Societies in Luxembourg
(Registre de Commerce et des Sociétés (R.C.S.)). The registered office is in
Luxembourg.
Prior to 2012, the Company owned the exclusive master franchise for Domino's
Pizza in Switzerland, Luxembourg and Liechtenstein. On 2 January 2012,
shareholders agreed to demerge the pizza business into its subsidiary Domino's
Pizza Switzerland AG ("DPS"), transfer the shares of that subsidiary directly
to the shareholders and convert the Company into an Investing Company. The
demerger became effective on 17 February 2012 and the Company became an
Investing Company under the AIM Rules for Companies ("AIM Rules"). On 18 March
2014, the Company adopted and implemented a new investing policy which is to
make investments and acquisitions, either through the issues of securities or
for cash, in quoted and non-quoted companies and their securities, in the
commodities sector with an emphasis on oil and gas and oil and gas service
sectors. Such investments include the provision of financing by way of
farm-ins, earn-ins, loans, equity or other forms of financing and investments
in and to companies in these sectors.
2.Directors' responsibility
The Board of Directors approved the annual report and financial statements
prepared in accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union on 1 June 2017 and they will be
submitted to shareholders for approval at the annual general meeting.
3.Summary of significant accounting policies
3.1.Basis of preparation
The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with International
Financial Reporting Standards ('IFRS') as adopted by the European Union on a
going concern basis and under the historical cost convention, as modified by
the revaluation of financial assets and financial liabilities.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires the Board of
Directors to exercise its judgement in the process of applying the Company's
accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in note 4.
3.2.Investment Entity
The characteristics of the Company are:
1. It obtains funds from one or more investors for the purpose of providing
those investors with investment management services
2. It commits to its investors that its business purpose is to invest funds
solely for returns from capital appreciation, investment income or both;
and
3. The Company measures and evaluates the performance of substantially all of
its investments on a fair value basis.
Therefore management concludes that the Company is an investment entity as
defined by IFRS 10. This requires the Company to consolidate all controlled
entities involved in the provision of investment-related services (either
directly or through a subsidiary to third parties as well as its investors) and
report all other subsidiary investments at fair value in its financial
statements.
Further, the Company controls Gas Exploration Finance Limited (GEF) through its
100% holding of the GEF's issued ordinary share capital. GEF is incorporated
in England and Wales. GEF is the only subsidiary of the Company and does not
provide investment related services. GEF is therefore measured at fair value
through profit and loss.
(a) Standards and amendments to existing standards effective 1 January 2016
There are no standards, interpretations or amendments to existing standards
that are effective from the first time for the financial year beginning 1
January 2016 that would be expected to have a material impact on the Company.
(b) New standards, amendments and interpretations effective after 1 January
2016 and have not been early adopted
A number of new standards, amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2016 and have not been
applied in preparing these financial statements. None of these are expected to
have a significant effect on the financial statements of the Company.
3.3.Going Concern
After making enquiries, the directors have a reasonable expectation that the
Company has adequate resources to continue its operations for the foreseeable
future. For that reason, they continue to adopt the going concern basis in
preparing the accounts.
3.4.Foreign currency translation
a. Functional and presentation currency
Items included in the financial statements of the Company are measured using
the currency of the primary economic environment in which it operates ('the
functional currency'). The financial statements for 2016 and the comparative
figures for 2015 are presented in GBP (GBP) which is both the presentation
currency and the functional currency for the Company.
b. Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions or valuation
where items are re-measured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end
exchange rate of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in
other comprehensive income as qualifying cash flow hedges and qualifying net
investment hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash
equivalents are presented in the income statement within finance income or
cost.
All other foreign exchange gains and losses are presented in the income
statement with other (losses)/gains - net.
3.5.Financial assets and financial liabilities at fair value through profit and
loss
(a) Subsidiaries reported at fair value
Subsidiary investments that are not consolidated are measured at fair value
through profit or loss, in accordance with IFRS 10 and IAS 39.
Transactions, balances and unrealised gains or losses on transactions with
unconsolidated subsidiaries (the entities reported at fair value in the
Statement of Financial Position) are not eliminated.
(b) Classification
The Company classifies its investments in debt and equity securities as
financial assets or financial liabilities at fair value through profit or loss.
This category has two sub-categories: financial assets or financial liabilities
held for trading; and those designated at fair value through profit or loss at
inception.
(i) Financial assets and liabilities held for trading
A financial asset or financial liability is classified as held for trading if
it is acquired or incurred principally for the purpose of selling or
repurchasing in the near term or if on initial recognition is part of a
portfolio of identifiable financial investments that are managed together and
for which there is evidence of a recent actual pattern of short-term profit
taking.
(ii) Financial assets and liabilities designated at fair value through profit
or loss at inception
Financial assets and financial liabilities designated at fair value through
profit or loss at inception are financial instruments that are not classified
as held for trading but are managed, and their performance is evaluated on a
fair value basis in accordance with the Company's documented investment
strategy.
The Company's policy requires the Board of Directors to evaluate the
information about these financial assets and liabilities on a fair value basis
together with other related financial information.
(c) Recognition, de-recognition and measurement
Regular purchases and sales of investments are recognised on the trade date -
the date on which the Company commits to purchase or sell the investment.
Financial assets and financial liabilities at fair value through profit or loss
are initially recognised at fair value. Transaction costs are expensed as
incurred in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Company has transferred substantially all
risks and rewards of ownership.
Subsequent to initial recognition, all financial assets and financial
liabilities at fair value through profit or loss are measured at fair value.
Gains and losses arising from changes in the fair value of the 'financial
assets or financial liabilities at fair value through profit or loss' category
are presented in the statement of comprehensive income within other net changes
in fair value of financial assets and liabilities at fair value through profit
or loss in the period in which they arise.
(d) Fair value estimation
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value of financial assets and liabilities traded
in active markets (such as publicly traded derivatives and trading securities)
are based on quoted market prices at the close of trading on the reporting
date.
The Company adopted IFRS 13, 'Fair value measurement', from 1 January 2015; it
changed its fair valuation input to utilise the last traded market price for
both financial assets and financial liabilities where the last traded price
falls within the bid-ask spread.
The fair value of financial assets and liabilities that are not traded in an
active market is determined using valuation techniques. The Company uses a
variety of methods and makes assumptions that are based on market conditions
existing at each reporting date. Valuation techniques used include the use of
comparable recent arm's length transactions, reference to other instruments
that are substantially the same, discounted cash flow analysis, option pricing
models and other valuation techniques commonly used by market participants
making the maximum use of market inputs and relying as little as possible on
entity-specific inputs.
(e) Financial assets at amortised cost
Financial assets at amortised cost are initially recognised at fair value of
the consideration received less directly attributable transaction costs. After
initial recognition, they are subsequently measured at amortised cost using the
effective interest rate method.
The interest method is a method of calculating the amortised cost of a
financial asset or financial liability and of allocating the interest income or
interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of the financial instrument, or, when appropriate,
a shorter period, to the net carrying amount of the financial asset or
financial liability. When calculating the effective interest rate, the Company
estimates cash flows considering all contractual terms of the financial
instrument but does not consider future credit losses. The calculation includes
all fees and points paid or received between parties to the contract that are
an integral part of the effective interest rate, transaction costs and all
other premiums or discounts.
(f) Transfers between levels of the fair value hierarchy
Transfers between levels of the fair value hierarchy are deemed to have
occurred at the beginning of the reporting period.
3.6.Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks and other short-term investments in an active market with original
maturities of three months or less1 and bank overdrafts. Bank overdrafts are
shown in current liabilities in the statement of financial position.
3.7.Accrued expenses
Accrued expenses are initially recognised at fair value and subsequently at
amortised cost.
3.8.Interest income and dividend income
Interest income is recognised on a time-proportionate basis using the effective
interest rate method. It includes interest income from cash and cash
equivalents and on debt securities at fair value through profit or loss.
Dividend income is recognised when the right to receive payment is established.
3.9.Transaction Costs
Transaction costs are costs incurred to acquire financial assets or liabilities
at fair value through profit or loss. They include fees and commissions paid
to agents, advisers, brokers and deals. Transaction costs, when incurred are
immediately recognised in profit or loss as an expense.
3.10.Taxation
The Company is domiciled in Luxembourg. The Company is fully taxable in
Luxembourg on profits realised from its operations.
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case, the tax is recognised in other comprehensive income or directly in
equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the countries
where the company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is recognised only on losses carried forward. There are no
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements.
A deferred tax asset is recognised to the extent that it is probable that
future taxable profits will be sufficient and available against which the
existing tax losses can be utilised. Deferred tax assets are reviewed at each
balance sheet date to determine the expected timing of their realisation and
whether there is impairment in their book carrying value.
3.11.Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after
the end of the reporting period. These are classified as investments and valued
at fair value. The Company's short-term loans and receivables comprise 'trade
and other receivables' and 'cash and cash equivalents' in the balance sheet.
3.12.Debtors and receivables
Debtors and receivables are stated at their nominal value, less provision for
estimated irrecoverable amounts.
3.13.Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
3.14.Trade payables
Trade payables are stated at their carrying amounts.
3.15.Borrowings
Loans and bank overdrafts are recorded at the proceeds amount. Interest and
financial charges, including premiums payable on repayment, are accounted for
on an accrual basis and are added to the amount of the debt.
Interest expense is accrued on a time basis by reference to the principal
outstanding and the interest rate applied.
3.16.Share-based payments
The Company operates an employee share option scheme under which the Company
awards equity instruments (options) to board members and employees in form of a
bonus. The fair value of the services received in exchange for the equity
instruments awarded is recognised as an expense. The total amount to be
expensed is determined by reference to the fair market value of the options
granted:
* Including any market performance conditions (for example, the share price);
* Excluding the impact of any service and non-market performance vesting
conditions (for example, profitability, sales growth targets and remaining
an employee or director of the Company over a specified time period); and
* Including the impact of any non-vesting conditions (for example, the
requirement for employees to save).
Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest. The total expense is recognised over the
vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the
Company revises its estimates of the number of options that are expected to
vest based on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
When the options are exercised, the company issues new shares. The proceeds
received net of directly attributable transaction costs are credited to share
capital when the options are exercised.
The impact of the above accounting policy has been determined as immaterial in
2015 and 2016 and consequently the required disclosures under IFRS2 have not
been included in the notes to these financial statements.
3.17.Provisions
Provisions for legal claims are recognised when the Company has a present legal
or constructive obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and the amount
has been reliably estimated.
When there are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the outflow with
respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation using a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to the passage of time is
recognised as interest expense.
4.Financial risk
4.1.Financial risk factors and critical accounting estimates and judgements
The Company's activities expose it to a variety of financial risks: market risk
(including currency risk, fair value interest rate risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk.
The Company is also exposed to operational risks such as custody risk. Custody
risk is the risk of loss of securities held in custody occasioned by the
insolvency or negligence of the custodian. Although an appropriate legal
framework is in place that eliminates the risk of loss of value of the
securities held by the custodian, in the event of its failure, the ability of
the Company to transfer securities might be temporarily impaired.
The Company's overall risk management programme seeks to maximise the returns
derived for the level of risk to which the Company is exposed and seeks to
minimise potential adverse effects on the Company's financial performance.
All securities investments present a risk of loss of capital. The maximum loss
of capital on purchased options, long equity and debt securities is limited to
the fair value of those positions.
The management of these risks is carried out by the Investment Committee. The
Company uses different methods to measure and manage the various types of risk
to which it is exposed; these methods are explained below.
The Board expects that such investments in private companies in the oil and gas
sectors might typically represent in excess of 80% of the Company's portfolio
at times and in certain circumstances may be represented by a single
investment. The Board recognises the inherent risks of such investments but
believes that these offer Shareholders significant upside potential. In order
to offset some of the risk as well as to provide the Company with access to
working capital, the Board intends investing part of its portfolio in large,
stable diversified quoted oil and gas and commodities companies. Shareholders
should be aware however, that such investments may only represent a small
portion of the Company's portfolio at any point in time.
4.1.1.Market risk
(a) Price risk
The Company is exposed to equity securities price risk. This arises from
investments held by the Company for which prices in the future are uncertain.
Where non-monetary financial instruments - for example, equity securities - are
denominated in currencies other than sterling, the price initially expressed in
foreign currency and then converted into sterling will also fluctuate because
of changes in foreign exchange rates. Paragraph (b) 'Foreign exchange risk'
below sets out how this component of price risk is managed and measured.
At 31 December, the fair value of equities exposed to price risk was zero.
(b) Foreign exchange risk
The Company operates internationally and is able to hold both monetary and
non-monetary assets denominated in currencies other than the euro, the
functional currency. Foreign currency risk, as defined in IFRS 7, arises as the
value of future transactions, recognised monetary assets and monetary
liabilities denominated in other currencies fluctuate due to changes in foreign
exchange rates. IFRS 7 considers the foreign exchange exposure relating to
non-monetary assets and liabilities to be a component of market price risk not
foreign currency risk. However, management monitors the exposure on all foreign
currency denominated assets and liabilities.
The Company's policy is not to manage the Company's exposure to foreign
exchange movements (both monetary and nonmonetary) by entering into any foreign
exchange hedging transactions.
While the Company has no direct exposure to foreign exchange rate changes on
the price of non-sterling-denominated securities, it may also be indirectly
affected by the impact of foreign exchange rate changes on the earnings of
certain companies in which the Company invests, even if those companies'
securities are denominated in sterling.
As at 31 December 2016, the Company was not exposed to any exchange rate
related to market risk.
(c) Interest rate risk
Interest rate risk arises from the effects of fluctuations in the prevailing
levels of markets interest rates on the fair value of financial assets and
liabilities and future cash flow. The Company has direct exposure to interest
rate changes on the valuation and cash flows of its interest bearing assets and
liabilities.
(d) Investment risk
During 2016, the main risks arising from the investment in shares related to
changes in the prices of resource materials and oil and gas prices. There was
some currency exposure as oil prices are generally quoted in USD and the shares
are in GBP (GBP). The shares were highly liquid and therefore there is limited
liquidity risk.
As the loan to UK Methane is unsecured there is an associated credit risk if UK
Methane cannot repay its debt when it falls due. The Board believes this risk
to be extremely low.
4.1.2.Credit risk
The Company is exposed to credit risk which is the risk that one party to a
financial instrument will cause a financial loss for the other party by failing
to discharge an obligation. The maximum exposure to credit risk at 31 December
2016 is the carrying amount of the GBP150,000 (together with accrued interest of
GBP20,303) loan to UK Methane Limited.
4.1.3.Liquidity risk
Liquidity risk is the risk that the Company may not be able to generate
sufficient cash resources to settle its obligations in full as they fall due or
can only do so on terms that are materially disadvantageous.
4.1.4.Capital Management
The primary objective of the Company's capital management is to ensure that the
Company remains solvent at all times and is therefore able to meet its
objectives and maximise shareholder value.
The Board monitors the capital requirements of the business at all times and
manages and monitors all operational expenses closely.
The Company has issued and will, in future, issue new shares in the market as
deemed appropriate.
The Company has no outstanding loans.
The table below analyses the Company's non-derivative financial liabilities and
net-settled derivative financial liabilities into relevant maturity groupings
based on the remaining period at the Balance Sheet date to the contractual
maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
At 31 December Total Less than Between 3 Between 1 Between 2
2016 3 months months and and 2 years and 5 years
1 year
Trade and other 135,330 75,269 - -
payables GBP (GBP) 60,061
At 31 December
2015
Trade and other 78,216 60,336 17,880 - -
payables GBP (GBP)
4.1.5.Fair value estimation
The fair value of financial assets and liabilities traded in active markets
(such as publicly traded securities) are based on quoted market prices at the
close of trading on the year end date. Prior to 1 January 2015, the quoted
market price used for financial assets held by the Company was the current bid
price; the quoted market price for financial liabilities was the current asking
price. The Company adopted IFRS 13, 'Fair value measurement', from 1 January
2015 and changed its fair valuation inputs to utilise the last traded market
price for both financial assets and financial liabilities.
An active market is a market in which transactions for the asset or liability
take place with sufficient frequency and volume to provide pricing information
on an ongoing basis. The fair value of financial assets and liabilities that
are not traded in an active market is determined by using valuation techniques.
The Company uses a variety of methods and makes assumptions that are based on
market conditions existing at each year end date.
For instruments for which there is no active market, the Company may use
internally developed models, which are usually based on valuation methods and
techniques generally recognised as standard within the industry. Valuation
models are used primarily to value unlisted equity, debt securities and other
debt instruments for which markets were or have been inactive during the
financial year. Some of the inputs to these models may not be market observable
and are therefore estimated based on assumptions.
The output of a model is always an estimate or approximation of a value that
cannot be determined with certainty, and valuation techniques employed may not
fully reflect all factors relevant to the positions the Company holds.
Valuations are therefore adjusted, where appropriate, to allow for additional
factors including model risk, liquidity risk and counterparty risk.
The carrying value less impairment provision of other receivables and payables
are assumed to approximate their fair values. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to
the Company for similar financial instruments.
The fair value hierarchy has the following levels 1:
* Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
* Level 2 inputs are inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or
indirectly; and
* Level 3 inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety. For
this purpose, the significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses observable inputs
that require significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Assessing the significance of a
particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to be that
market data that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
Investments whose values are based on quoted market prices in active markets,
and are therefore classified within Level 1, include active listed equities,
The Company does not adjust the quoted price for these instruments. Financial
instruments that trade in markets that are not considered to be active but are
valued based on quoted market prices, dealer quotations or alternative pricing
sources1 supported by observable inputs are classified within Level 2. These
include investment-grade corporate bonds and certain non-US sovereign
obligations, listed equities and over the-counter derivatives. As Level 2
investments include positions that are not traded in active markets and/or are
subject to transfer restrictions, valuations may be adjusted to reflect
illiquidity and/or non-transferability, which are generally based on available
market information. Investments classified within Level 3 have significant
unobservable inputs, as they trade infrequently. Level 3 instruments include
private equity and corporate debt securities. As observable prices are not
available for these securities, the Company has used valuation techniques to
derive the fair value.
As at 31 December 2016 the fair value hierarchy the Company's assets and
liabilities (by class) measured at fair value comprised a single level 3 asset
represented by the fair value of the loan to UK Methane Limited and Gas
Exploration Finance Limited.
4.2.Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Management makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related
actual results.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities are
outlined below
a. Fair value of securities not quoted in an active market
The fair value of such securities not quoted in an active market may be
determined by the Company using reputable pricing sources. The Company would
exercise judgement and estimates on the quantity and quality of pricing sources
used. Where no market data is available, the Company may value positions using
its own models, which are usually based on valuation methods and techniques
generally recognised as standard within the industry.
The models used for private equity securities are based mainly on the effective
interest rate.
b. Valuation of Warrants and Stock options
In accordance with the accounting policy stated in notes 3, the Company uses
the Black and Sholes model to estimate the fair value of warrants and stock
options issued by the Company. All outstanding warrants were exercised in
February 2015. The valuation of the stock options and the corresponding impact
of the accounting policy has been determined as immaterial in 2014, 2015 and
2016 consequently the required disclosures under IFRS 2 have not been included
in the notes to these financial statements.
c. Accruals
In accordance with the accounting policy stated in note 3, the Company has
prepared its financial statements using the accrual basis of accounting.
d. Income taxes
The Company is subject to income taxes in Luxembourg. Judgement is required in
determining the overall provision for income taxes. There are transactions for
which the ultimate tax determination is uncertain. The Company recognises
liabilities for anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will
impact the current and deferred income tax assets and liabilities in the period
in which such determination is made.
5.Interest
2016 2015
GBP (GBP) GBP (GBP)
Interest income 5,849 5,218
6.Directors' remuneration and staff costs
2016 2015
GBP (GBP) GBP (GBP)
Wages and salaries - -
Social security costs - -
Defined benefit pension plan costs - -
Fees and costs of the Board of Directors 48,000 43,000
Other staff costs - -
Total 48,000 43,000
Aggregate Directors' remuneration (GBP (GBP))
Salary and Bonus Pension 2016 2015
Fees
Bruce Vandenberg 12,000 - - 12,000 12,000
Gerwyn Williams 12,000 - - 12,000 12,000
John Killer 12,000 - - 12,000 12,000
Gary Neville 12,000 - - 12,000 7,000
Total 48,000 - - 48,000 43,000
As announced on 27 May 2011 the board awarded an option to acquire 3 million
shares in the company to Bruce Vandenberg. The options vest equally over three
years and are exercisable at a price of GBP (GBP) 0.03 per share. After
adjusting for the share split on 3 January 2012 and the share cancellation on
17 February 2012, the number of options amounts to 1,597,904 exercisable at a
price of GBP (GBP) 0.06.
No other options are held by any of the Directors.
There is no Company private pension scheme in force for the directors.
7.Administrative expenses
2016 2015
GBP (GBP) GBP (GBP)
Administration and general expenses 239,487 129,360
Included in administration expenses are:
- Auditors' remuneration - audit services 12,500 12,500
- Auditors' remuneration - advisory fees - -
Expenses were primarily related to costs associated with maintaining the AIM
listing and include Nomad, Broker, Registrar, AIM fees and Directors fees.
8.Interest and financial charges
2016 2015
GBP (GBP) GBP (GBP)
Loan interest charges 23,683 18,638
Bank charges 1,729 912
Total 25,412 19,550
9.Income tax expense
The Company is fully taxable in Luxembourg on profits realised from its
operations. There were no taxable profits attributable to Luxembourg in 2016
(2015: nil). The minimum tax charge is GBP (GBP) 2,749.
2016 2015
The tax charge is determined as follows: GBP (GBP) GBP (GBP)
Pre-tax loss for the year before tax (309,799) (186,692)
Expected tax charge for the year: (2,749) (2,366)
The Company has not recognised the deferred income tax assets in respect of
losses in Luxembourg that can be carried forward indefinitely against future
taxable income.
Final tax assessments have been received in Luxembourg up to the year 2015.
10.Earnings (loss) per share (EPS)
The calculation of the basic earnings per share is determined on the loss
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year. During the year the Company issued new shares
(see note 12) and the comparative earnings per share have been adjusted to
reflect these changes. The elements used in the calculation are:
2016 2015
Number of issued shares 367,702,034 353,416,320
Weighted average number of shares in circulation 353,034,265 353,034,265
during the year:
GBP (GBP) GBP (GBP)
Loss for the year (309,799) (189,058)
Basic (loss) per share (0.0008) (0.0005)
Weighted (loss) per share (0.0008) (0.0005)
Due to the non-dilutive nature of the warrants and options the basic and
diluted EPS are the same.
11.Financial assets at fair value through profit and loss
2016 2015
GBP (GBP) GBP (GBP)
Investment in Subsidiary 38,100 38,100
Loan to Subsidiary/Subsidiary Loan to UK Methane 170,303 164,454
As at 31 December 2016, the Company's investments comprise:
* GBP (GBP) 38,100 being the arms-length purchase price paid for the
acquisition of Gas Exploration Finance Limited ("GEF") on 19 March 2014.
* A GBP (GBP) 150,000 five year back to back loan to enable GEF to invest in UK
Methane on 19 March 2014 for a five year period. The loan accrues an
interest value of LIBOR plus 3% per annum. GBP (GBP) 20,303 (2015: GBP (GBP)
14,454) of the loan balance at 31 December 2016 relates to accrued
interest. GBP (GBP) 5,849 has been recognised in 2016 (2015: GBP (GBP) 5,218).
GEF has a framework financing agreement ("Framework Agreement") with Coastal
Oil and Gas Limited and UK Methane Limited (together, the "Gas Companies").
The Gas Companies have an ownership interest in 17 petroleum exploration
development licenses in South Wales, Bristol and Kent with the right to explore
and drill for shale gas in the licence areas. Under the Framework Agreement,
the Gas Companies have appointed GEF, on a non-exclusive basis, to co-invest by
financing their exploration and development operations. In consideration for
this co-investment, GEF will receive an economic interest commensurate with the
proportion of drilling expenses covered through the funding received from GEF.
A first financing agreement has been entered into between GEF and UK Methane
Limited ("UK Methane") for co-investment in explorative drilling by UK
Methane. The key terms of the loan are as follows:
* The loan is for GBP150,000.
* The loan is unsecured.
* The interest on the loan is 3% above Libor.
* The loan plus accrued interest is repayable on the fifth anniversary of the
date of the loan i.e. 19 March 2018.
* If and when UK Methane generates operating profits, UK Methane will for
long as the loan is outstanding pay a premium equating to 1% of the
revenues up to a maximum amount of GBP150,000 (or the amount of the loan if
the loan is less than GBP150,000). The premium will be paid in monthly
installments relative to the aggregate revenues received in the premium.
UK Methane may prepay the Loan at any point without premium or penalty
(save for any accrued and unpaid premium) up to the date of prepayment
together with accrued interest on the loan.
The shares of GEF are not publicly traded; redemptions can only be made by the
Company on the redemption dates and are subject to the required notice periods
specified in the loan agreement. The shares of UK Methane are not publicly
traded; redemptions can only be made by the Company on the redemption dates and
are subject to the required notice periods specified in the loan agreements.
As a result, the carrying value of the GEF loan may not be indicative of the
value of the loan ultimately realised on repayment. The Company may make
adjustments to the value based on considerations such as; changes in the credit
risk and whether UK Methane moves into operating profits. As at 31 December
2016, the Company classified its investment in GEF and GEF's investment in UK
Methane as level 3 within the fair value hierarchy
The Board, after careful consideration, believes there have been no material
changes effecting the valuation of the financial position. Consequently, the
original value continue to reflect fair value as defined by IFRS 10 and there
is no requirement for any adjustments to be posted to the Income Statement.
12.Capital and reserves
The Company has one class of share, which carries equal voting rights and
rights to distributions of dividends from available retained earnings.
Share capital 2016 2015
GBP (GBP) GBP (GBP)
Allotted, issued and fully paid up at 486,719 486,719
beginning of year
Issue of new shares 20,000 -
Allotted, issued and fully paid up at end of 506,719 486,719
year
Represented by 367,702,034 shares (2015: 353,416,320 shares).
In February 2015, the Board of Directors approved the issue and allotment of
4,584,655 ordinary shares to JIM Nominees Limited for a total consideration of
GBP 9,169.31 (0.002 GBP per share). Such a decision should be later on ratified
in front of a notary. A notary has not yet ratified the issue of the 4,584,655
ordinary shares and therefore the issue has not been yet enacted.
In July 2017, the Board of Directors approved the issue and allotment of
14,285,714 ordinary shares in the Company at a share price of GBP 0.0014, to an
independent professional advisor, in lieu of payment for professional services
totalling GBP 20,000. Such a decision should be later on ratified in front of a
notary. A notary has not yet ratified the issue of the 14,285,714 ordinary
shares and therefore the issue has not been yet enacted.
Share Premium 2016 2015
GBP (GBP) GBP (GBP)
At the beginning of year 182,483 182,483
Issue of new shares - -
At the end of year 182,483 182,483
Stock option plan
On 1st August 2005, the general meeting of shareholders of the Company approved
a stock option plan for the benefit of the directors and key employees, the
historic Option Plan. Under this the plan, as at 31 December 2016, there were
in circulation 831,407 (2015: 831,407) fully vested options at GBP (GBP) 0.86510,
103,129 (2015: 103,129) fully vested options at GBP (GBP) 0.53779 and 45,784
(2015: 45,784) fully vested options at GBP (GBP) 0.42098.
The number of share options outstanding as well as their exercise price changed
in 2015 as a result of the capital restructuring as reflected in the table
below.
Number of shares under option under the historic Share Option Plan
2016 2016 2015 2015
Exercise Price No. of shares Exercise Price No of shares
GBP (GBP) GBP (GBP)
0.86510 831,407 0.86510 831,407
0.53779 103,129 0.53779 103,129
0.42098 45,784 0.42098 45,784
No share options have been exercised under the historic Share Option Plan.
At the AGM in 2011, the shareholders approved a new Stock Option Plan whereby
the Company may grant options for up to 10 per cent. of its issued share
capital from time to time. On 27 May 2011, the Board awarded an option to
acquire 3 million shares in the company to Bruce Vandenberg. The options vest
equally over three years and are exercisable at a price of GBP (GBP) 0.03 per
share. Following the financial restructuring during 2012, the option amounts
to 1,597,904 shares at a price of GBP (GBP) 0.06. At the 31 December 2016, there
were 1,597,904 (2015: 1,597,904) fully vested options in issue under the new
Stock Option Plan.
Number of shares under option under the new Stock Option Plan
2016 2016 2015 2015
Exercise Price No. of shares Exercise Price No of shares
GBP (GBP) GBP (GBP)
0.06 1,597,904 0.06 1,597,904
No share options have been exercised under the new Stock Option Plan.
The figures above reflect the situation as at the end of 2016.
Due to the immaterial effects of the above stock option plans on the income
statement and balance sheet, the Company has elected not to apply the
provisions required under IFRS2 'Share based payments'.
13.Trade and other payables
2016 2015
Amounts falling due within one year GBP (GBP) GBP (GBP)
Trade creditors 135,330 78,216
Other creditors 158,000 110,000
Total 293,330 188,216
Other creditors comprises of accrued directors fees of GBP (GBP) 158,000 (2015:
GBP (GBP) 110,000).
14. Convertible loan
As at 31 December 2016, the Company had received convertible loan funding
totalling GBP (GBP) 460,000 (As at 31 December 2015: GBP (GBP) 300,000) from its
majority shareholder, Gerwyn Llewellyn Williams.
During the year ended 31 December 2016, loan funding totalling GBP (GBP) 160,000
was received from Mr. Williams.
The facility has been utilised for general working capital purposes.
The drawn down loan amount bears interest at a rate of 6% per annum;
The drawn down loan amount is convertible at the discretion of Mr. Williams in
ordinary shares in the Company at the market price prevailing at the date of
conversion.
15.Related party transactions
The Company's majority shareholder is Gerwyn Llewellyn Williams who owned
26.91% of the Company during the year.
During the year, Gerwyn Llewellyn Williams provided a convertible loan of GBP
(GBP) 460,000 to the Company. During the year interest of GBP (GBP) 23,683 (2015:
GBP (GBP) 18,363) has been accrued in respect of this loan.
Further details regarding this facility are detailed in note 14.
16.Post Balance Sheet events
On 16 March 2017, the Company raised GBP500,000 (before expenses) by way of a
placing of 555,558,200 new ordinary shares ("New Ordinary Shares") at a price
of GBP0.0009 per share.
On 5 April 2017, Gerwyn Llewellyn Williams, Company Director and Chief
Executive Officer, converted his convertible loan totalling GBP480,000 into new
ordinary shares in the Company at a conversion rate of GBP0.0013, equating to
369,230,769 new ordinary shares ("New Ordinary Shares"). Following this
conversion, Mr Williams held 472,003,497 ordinary shares in the Company.
On 10 April 2017, the Company raised GBP600,000 (before expenses) by way of a
placing of 461,542,700 new ordinary shares ("New Ordinary Shares") at a price
of GBP0.0013 per share.
At a board meeting of the Company held on 12 April 2016, it was decided that
the Company should cease its investment activities and instead focus on
completing a suitable reverse takeover transaction as soon as possible.
The Company is investigating a number of potential reverse takeover candidates
in the oil and gas sector.
The Company has now become an AIM Rule 15 cash shell, which means that the
Company must make an acquisition or acquisitions which constitute a reverse
takeover under Rule 14 of the AIM Rules by 12 October 2017, otherwise the
trading of the Company's shares on AIM will be suspended.
If the Company has not made an acquisition or acquisitions which constitute a
reverse takeover under Rule 14 of the AIM Rules within six months of such
suspension, the admission of the Company's shares to trading on AIM will be
cancelled.
END
(END) Dow Jones Newswires
June 07, 2017 07:30 ET (11:30 GMT)
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