TIDMNUOG
RNS Number : 8654X
Nu-Oil and Gas PLC
23 December 2019
23 December 2019
Nu-Oil and Gas plc
("Nu-Oil" or "the Company")
Audited Results for the year ended 30 June 2019
Nu-Oil today announces its results for the year ended 30 June
2019.
Annual General Meeting
The Company also announces that its Annual General Meeting of
shareholders ("AGM") will be held at Millbank Tower, London, SW1PX
4QP on Friday 24 January 2020 at 11:30 a.m.
Financial Statements
Included with this announcement is a summary of the Company's
Annual Accounts for the year ended 30 June 2019 as extracted from
the Annual Report, being:
-- Strategic Report
-- Consolidated Income Statement
-- Consolidated Statement of Comprehensive Income
-- Consolidated Statement of Financial Position
-- Consolidated Statement of Changes in Equity
-- Consolidated Statement of Cashflows
-- Notes to the Financial Statements
The full Annual Report and Financial Statements for the year
ended 30 June 2019 and the notice of AGM are available to download
from the Company's website at www.nu-oilandgas.com. Those
shareholders who have elected to receive paper copies of all
communications will receive a copy of both documents in addition to
the AGM Letters and proxy forms, which have been sent to all
shareholders today. Shareholders can change their chosen method of
communication in Shareview at the following address:
https://portfolio.shareview.co.uk/7/Portfolio/Default/en/Anonymous/Pages/Login.aspx.
Enquiries
Nu-Oil and Gas plc
Investor Relations & Communications Tel: +44 (0)330 895 7988
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Rory Murphy/Ritchie Balmer/Jack
Botros
Novum Securities Limited Tel: +44 (0) 20 7399 9425
Jon Bellis
Disclaimer
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Strategic Report
Financial Review
The Consolidated Financial Statements and notes should be read
in conjunction with this review which has been included to assist
in the understanding of the Group's financial position at 30 June
2019.
Loss before tax
Loss before tax for the year was GBP2,799,000 (2018:
GBP1,878,000 loss), comprising administrative expenses of
GBP2,011,000 (2018: GBP1,671,000) and finance costs of GBP788,000
(2018: GBP206,000). Administrative expenses reflected several
one-off / exceptional items charged to the income statement,
including, the impairment of the Group's intangible exploration and
development assets and settlement and termination payments.
The loss included depreciation, amortisation and impairments of
GBP1,000,000 in the period (2018: GBP341,000) relating to tangible
and intangible assets.
Statement of Financial Position
The consolidated statement of financial position for the Group
is shown below. Net liabilities at 30 June 2019 were GBP3,419,000
(2018: net liabilities of GBP1,053,000). The increase in net
liabilities reflected a combination of several items including: the
reassessed carrying amount of the loan from Shard Capital
Management Limited ('the Shard Loan') following post year-end
refinancing and restructuring of the debt with C4 Energy Ltd;
provision adjustments made in relation to the recoverability of
certain trade and other receivables in light of their perceived
recoverability and the impairment of the Group's intangible assets,
also in light of their expected future economic value.
In addition, fundraising activities undertaken in the period
raised GBP380,000 in gross proceeds through the issue of new
ordinary shares.
The majority of the Group's liabilities at the year-end related
to the third-party loans and related party liabilities. On 2
October, the Company announced that it had agreed to settle related
party liabilities by transferring ownership of its 50% interest in
MFDevCo. In addition, following the sale of the Shard Loan to C4
Energy Ltd, it was refinanced and restructured.
At 30 June 2019, the Group had cash balances of GBP58,000
compared to GBP861,000 at 30 June 2018. The Group had trade and
other payables of GBP1,440,000 at 30 June 2019 (2018:
GBP1,555,000).
Cash flows
Net cash outflow for the year was GBP803,000 compared with a net
inflow of GBP207,000 in 2018. The change in net cash flow year on
year being mainly due to the reduced level of funds raised in the
market.
Cash Shell Status
On 4 November 2019, with the approval of the resolutions at the
Company's General Meeting and the sale of the Company's 50%
interest in MFDevCo to RMRI, the Company was designated an AIM Rule
15 cash shell. This requires the Company to make an acquisition (or
acquisitions) which would constitute a reverse takeover under AIM
Rule 14 within six months of 4 November 2019, failing which the
Company will be suspended from trading on AIM. The Company does not
intend to re-admit to trading on AIM as an investing company under
AIM Rule 8.
Going Concern
The Directors judge it appropriate to adopt the going concern
basis in preparing the Consolidated and Company Financial
Statements given the new Board's proven track record of raising
funds, most recently with reference to the placing of GBP500,000 in
November 2019. As such, the Directors have a reasonable expectation
that the Company can or will obtain sufficient resources to
continue operating for the foreseeable future.
In forming this judgement the Directors reviewed the Group's
funding, budget and business plan for the twelve months from
signing the financial statements. The Directors have relied upon
the critical assumption that the Group will be able to achieve the
key milestones of the business plan, notably with regard to
securing an acquisition or acquisitions which will constitute a
reverse takeover, which they believe will result in the
availability of adequate additional funding.
The Directors have concluded that to the extent that these
assumptions are not valid, there exists a material uncertainty that
casts significant doubt upon the Group's and the Company's ability
to continue as a going concern. Nevertheless after making
enquiries, and considering the uncertainties to assumptions
described, and based on the relevant facts and information
available on the date the financial statements were approved by the
Board, the Directors consider these assumptions to be valid and as
such they continue to adopt the going concern basis in preparing
the financial statements.
Other operational events during the financial year
Other operational and financial events during the year
included:
The impairment of the Group's intangible assets. As at the year
end, the Directors concluded that its shareholding in its Canadian
assets was of negligible value. In addition, further investment
into the assets was deemed uneconomic and as a result, the future
economic benefit of the asset was deemed negligible. As a result,
the shareholding in Enegi Oil Inc. in Newfoundland has been
impaired in full.
In December 2018, the Company announced its decision not to
extend the license option granted to G2 Energy Corp. in respect of
the exploration license EL1070 in Canada.
As announced on 21 October 2019 the Company returned the equity
interest it held in Enegi Oil Inc. back to Enegi Oil Inc. under the
terms of RSNL1990 CHAPTER C-36 CORPORATIONS ACT (Newfoundland),
which allows an investor to donate its holdings in a company back
to the company in question at no charge to the company. Nu-Oil's
interest was limited to its equity investment and, as a result, no
longer has any interest in the Canadian portfolio. Accordingly, the
investment value at year-end has been impaired in full in the
financial statements. However, as at 30 Jun 2019, the Company was a
shareholder of Enegi Oil Inc. and consequently, the Group's
consolidated statement of financial position reflect the asset
retirement provision which EOI had made. Following the return of
equity, EOI will no longer be consolidated in the Group
accounts.
In January 2019, both Alan Minty and Nigel Burton, the Company's
Executive Chairman and Chief Executive Officer respectively,
resigned. Alan Minty was replaced by Graham Scotton and Nigel
Burton was replaced by both Damian Minty and Alison Pegram as Joint
Managing Directors.
At the Annual General Meeting held on 25th January 2019,
shareholders approved the resolution granting authority to the
Directors to issue shares, on a pre-emptive basis, for cash up to
75% of the issued share capital of the Company. In conjunction with
the passing of the resolution, the Directors committed to limit the
use of that share authority to a cap of 25% of the issued share
capital as at 25th January 2019, and to accompany any issue of new
shares under that authority cap with an open offer for eligible
shareholders to participate on similar terms.
In March 2019, the Company announced a placing of new ordinary
shares raising gross proceeds of GBP250,000 at a placing price of
0.3p. The open offer raised a further GBP130,000 on similar pricing
terms. On 12 July 2019 a General meeting was held at which the
shareholders approved resolutions including one removing the open
offer commitment.
Principal Risks and Uncertainties
Risk recognition and management are viewed as integral to the
Group's objectives of creating and maintaining shareholder value.
In spite of its designation as a cash shell, this remains true and
in particular within the area of oil and gas exploration and
development.
The Board, as a whole, is responsible for oversight of the
processes by which risk is considered for both ongoing operations
and prospective actions. In specific areas, it is assisted by the
Audit and the Risk Committees. Management is responsible for
establishing procedures which provide assurance that major business
risks are identified, consistently assessed and appropriately
addressed.
Cash Shell Status
The Directors consider the following of particular relevance
given the Company's designation as a cash shell:
Ability to maintain AIM listing: As detailed in the Chairman's
Statement and subsequent to the year-end, the Company has until 4
May 2020 by when it needs to complete an acquisition which will
constitute a reverse takeover, failing which the Company will be
suspended from trading on AIM. If the Company is unable to find a
suitable reverse takeover target within six months of such
suspension, it will be cancelled from AIM and be re-registered as a
private company. There will therefore be no external market for
shareholders to trade their shares in the Company.
Ability of the Company to continue as a going concern: As
detailed in note 1, the ability of the Company to continue as a
going concern is dependent on its ability to raise adequate finance
in support of its acquisition objectives and working capital
requirements over the upcoming period. However, in the event that
the Company fails to raise sufficient funding to meet its
objectives, it may not be able to continue as a going concern.
Financial Risk Management:
In addition, the following risks can arise in the normal course
of business, and therefore considered relevant for the Company:
Currency risk: The Group may be exposed to changes in the
exchange rate between the British pound (i.e. its reporting
currency) and foreign currencies. Such movements could impact the
financial performance of the Company. During the year, the Group's
held interests in Canadian Dollars via its subsidiary, Enegi Oil
Inc. At each period end, assets and liabilities that are held in a
currency other than the Group's reporting currency are translated
into sterling. The resultant foreign currency gain or loss arising
is reflected in the consolidated statement of comprehensive income
(SOCI) in the period in which it arises.
Liquidity risk: The Company's approach to managing liquidity is
to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when due and to not undertake
commitments which it is unable to meet, under both normal and
stressed conditions. The Company has access to funding via capital
markets (debt and equity) and these are considered sufficient to
meet the anticipated funding requirements. Cash flow forecasts of
the Company's liquidity requirements are monitored to ensure it has
sufficient cash to meet operational needs over the next twelve
months.
Financing risk: As the Group does not yet produce revenues it
needs to continue to raise finance to implement its business
strategy. The Board regularly monitors the availability of finance
to ensure that it has sufficient confidence it can fund the actions
that the Group needs to take to implement its strategy.
Key Performance Indicators (KPI)
Given the Company's designated status as a 'cash shell', the
Board does not consider key performance indicators are appropriate
to the performance of the business. The Board does, however,
continue to closely monitor administrative expenses and cash
balances. The critical non-financial KPI, at this stage, is the
ability to complete an acquisition or acquisitions which would
constitute a reverse takeover (RTO). In addition, the Directors
expect further KPIs will become relevant and reported following an
RTO acquisition.
On behalf of the Board
Jay Bhattacherjee, Non-Executive Chairman, 23 December 2019
Consolidated and Parent Company Financial Statements
Consolidated Income Statement
For the year ended 30 June 2019
GBP'000 Note 2019 2018
----------------------------------- ---- -------------- --------
Revenue - -
Cost of sales - -
----------------------------------- ---- -------------- --------
Gross profit / (loss) - -
Administrative expenses (2,011) (1,672)
----------------------------------- ---- -------------- --------
Loss from operating activities (2,011) (1,672)
Finance expense 5 (788) (206)
----------------------------------- ---- -------------- --------
Loss before tax (2,799) (1,878)
Tax 6 - -
----------------------------------- ---- -------------- --------
Loss for the period (2,799) (1,878)
----------------------------------- ---- -------------- --------
Loss per share (pence per share)
Basic 7 (0.2p) (0.1p)
Diluted 7 (0.2p) (0.1p)
----------------------------------- ---- -------------- --------
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2019
GBP'000 Note 2019 2018
------------------------------------------------ ------ ------------- -------
Loss for the period (2,799) (1,878)
-------------------------------------------------------- ------------- -------
Other comprehensive income / (expense)
Other comprehensive income to be reclassified
to Profit and Loss in subsequent periods
Currency translation differences 6 (1)
-------------------------------------------------------- ------------- -------
Total comprehensive loss for the period
attributable to owners of the parent (2,793) (1,879)
-------------------------------------------------------- ------------- -------
Consolidated and Parent Company Financial Statements
(continued)
Consolidated Statement of Financial Position, as at 30 June
2019
GBP'000 Note 2019 2018
-------------------------------- ---- ------------- --------
Non-current assets
Property, plant and equipment 8 8 195
Intangible assets 8 - 813
Other long-term assets 10 500 477
--------------------------------- ---- ------------- --------
508 1,485
Current assets
Trade and other receivables 11 1,165 993
Cash and cash equivalents 58 861
--------------------------------- ---- ------------- --------
1,223 1,854
-------------------------------- ---- ------------- --------
Total assets 1,731 3,339
Current liabilities
Loans 14 (2,562) (1,826)
Trade and other payables 15 (1,440) (1,555)
Due to related parties 12 (657) (541)
--------------------------------- ---- ------------- --------
(4,659) (3,922)
Non-current liabilities
Provisions 9 (491) (470)
--------------------------------- ---- ------------- --------
Total liabilities (5,150) (4,392)
Net liabilities (3,419) (1,053)
--------------------------------- ---- ------------- --------
Equity
Ordinary share capital 3,207 3,072
Share premium account 31,359 31,062
Reverse acquisition reserve 9,364 9,364
Warrant reserves 404 409
Other reserves (2,487) (2,487)
Accumulated losses (45,266) (42,473)
--------------------------------- ---- ------------- --------
Total equity (3,419) (1,053)
--------------------------------- ---- ------------- --------
The financial statements together with the notes to the
financial statements were approved by the Board
Jay Bhattacherjee, Non-Executive Chairman, 23 December 2019
Consolidated and Parent Company Financial Statements
(continued)
Company Statement of Financial Position, as at 30 June 2019
GBP'000 Note 2019 2018
-------------------------------- ---- ----------------- -------------
Non-current assets
Property, plant and equipment 8 5 187
Intangible assets 8 - 491
Other long-term assets 10 - 326
-------------------------------- ---- ----------------- -------------
5 1,004
Current assets
Trade and other receivables 11 1,165 958
Cash and cash equivalents 58 861
-------------------------------- ---- ----------------- -------------
1,223 1,819
Total assets 1,228 2,823
Current liabilities
Loans 14 (2,562) (1,826)
Trade and other payables 15 (1,193) (1,359)
Due to related parties 12 (464) (358)
-------------------------------- ---- ----------------- -------------
(4,219) (3,543)
Non-current liabilities
Provisions - -
-------------------------------- ---- ----------------- -------------
Total liabilities (4,219) (3,543)
Net liabilities (2,991) (720)
-------------------------------- ---- ----------------- -------------
Equity
Ordinary share capital 3,207 3,072
Share premium account 31,359 31,062
Merger relief reserve 7,548 7,548
Warrant reserve 404 409
Other reserves (2,487) (2,487)
Accumulated losses (43,022) (40,324)
Total equity (2,991) (720)
-------------------------------- ---- ----------------- -------------
The Company has elected to take the exemption under section 408
of the Companies Act 2006 to not present the Parent Company income
statement or statement of comprehensive income. The loss for the
Parent Company for the year to 30 June 2019 was GBP2,698,000 (2018:
GBP1,954,000).
The financial statements together with the notes to the
financial statements were approved by the Board
Jay Bhattacherjee, Non-Executive Chairman, 23 December 2019
Consolidated and Parent Company Financial Statements
(continued)
Consolidated Statement of Changes in Equity, for the year ended
30 June 2019
Ordinary Reverse Warrant
Share Share Premium Acquisition and Other Accum Total
GBP'000 Capital Account Reserve Reserves Losses Equity
----------------------- ------------- ------------- ------------- ------------- ------------- -------
Balance, 01-Jul-2017 2,757 28,671 9,364 (2,078) (40,594) (1,880)
Loss for the period - - - - (1,878) (1,878)
Currency translation
differences - - - - (1) (1)
----------------------- ------------- ------------- ------------- ------------- ------------- -------
Comprehensive loss - - - - (1,879) (1,879)
Equity fundraise 315 2,391 - - - 2,706
----------------------- ------------- ------------- ------------- ------------- ------------- -------
Balance, 30-Jun-2018 3,072 31,062 9,364 (2,078) (42,473) (1,053)
Loss for the period - - - - (2,799) (2,799)
Currency translation
differences - - - - 6 6
----------------------- ------------- ------------- ------------- ------------- ------------- -------
Comprehensive loss - - - - (2,793) (2,793)
Equity fundraise 135 297 - (5) - 427
----------------------- ------------- ------------- ------------- ------------- ------------- -------
Balance, 30-Jun-2019 3,207 31,359 9,364 (2,083) (45,266) (3,419)
----------------------- ------------- ------------- ------------- ------------- ------------- -------
Company Statement of Changes in Equity, for the year ended 30
June 2019
Ordinary Share Merger Warrant
Share Premium Relief and Other Accum Total
GBP'000 Capital Account Reserve Reserves Losses Equity
----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Balance, 01-Jul-2017 2,757 28,671 7,548 (2,078) (38,370) (1,472)
Loss for the period - - - - (1,954) (1,954)
Currency translation - - - - - -
differences
----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Comprehensive loss - - - - (1,954) (1,954)
Equity fundraise 315 2,391 - - - 2,706
----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Balance, 30-Jun-2018 3,072 31,062 7,548 (2,078) (40,324) (720)
Loss for the period - - - - (2,698) (2,698)
Currency translation - - - - - -
differences
----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Comprehensive loss - - - - (2,698) (2,698)
Equity fundraise 135 297 - (5) - 427
----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Balance, 30-Jun-2019 3,207 31,359 7,548 (2,083) (43,022) (2,991)
----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Warrant and other reserves comprise:
-- Warrant reserve of GBP404,000, reflecting the total cost of
warrants issued pre-IPO and post-IPO; and
-- Other reserves of GBP2,487,000 consisting of: (i) Shares
issued to the Employee Benefit Trust as a part of the Performance
Share Plan, refer Note 17; and (ii) Shares that the Company has
purchased which were used as security against the loan outstanding
to Shard Capital Management Limited.
Consolidated and Parent Company Financial Statements
(continued)
Consolidated Cash Flow
For the year ended 30 June 2019
GBP'000 Note 2019 2018
----------------------------------------- ---- ------- -------
Cash flow from operating activities
Cash used in operating activities 17 (1,130) (2,156)
----------------------------------------- ---- ------- -------
Net cash used in operating activities (1,130) (2,156)
Cash flow from financing activities
Share capital issued for cash 380 2,706
Loan repayments 14 (53) (343)
Net cash from financing activities 327 2,363
Net (decrease)/increase in cash in
the period (803) 207
----------------------------------------- ---- ------- -------
Cash and cash equivalents at the start
of the period 861 654
----------------------------------------- ---- ------- -------
Cash and cash equivalents at the end
of the period 58 861
----------------------------------------- ---- ------- -------
Company Cash Flow
GBP'000 Note 2019 2018
----------------------------------------- ---- ------- -------
Cash flow from operating activities
Cash used in operating activities 17 (1,130) (2,156)
----------------------------------------- ---- ------- -------
Net cash used in operating activities (1,130) (2,156)
Cash flow from financing activities
Share capital issued for cash 380 2,706
Loan repayments 14 (53) (343)
Net cash from financing activities 327 2,363
Net (decrease)/increase in cash in
the period (803) 207
----------------------------------------- ---- ------- -------
Cash and cash equivalents at the start
of the period 861 654
----------------------------------------- ---- ------- -------
Cash and cash equivalents at the end
of the period 58 861
----------------------------------------- ---- ------- -------
Notes to the Financial Statements
Corporate Information
Nu-Oil and Gas plc (the 'Company' and together with its
subsidiaries, the 'Group') is a company incorporated in England on
13 September 2007 and has registered address of Audley House, 13
Palace Street, London, SW1E 5HX. The Group is domiciled in the UK
for tax purposes and its shares are quoted on the Alternative
Investments Market ('AIM') of the London Stock Exchange.
The principal activity of the Company and Group is the
identification, development and operation of hydrocarbon
opportunities.
1. Basis of Preparation
The consolidated financial statements of the Group and the
financial statements of the parent Company have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU), the
Companies Act 2006 that applies to companies reporting under IFRS,
and IFRS-IC interpretations. The consolidated financial statements
have been prepared under the historical cost convention. The
preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 2.
Changes in accounting principles and adoption of new and revised
standards
In the year ended 30 June 2019, the Directors have reviewed all
the new and revised Standards. The only relevant new standard that
is effective for this year's financial statements is IFRS 9
'Financial Instruments' but this has not had a material impact on
the financial statements.
There are no standards in issue but not yet effective which
could have a material impact on the financial statements.
Going concern
The Directors judge it appropriate to adopt the going concern
basis in preparing the Consolidated and Company Financial
Statements given the new Board's proven track record of raising
funds, most recently with reference to the placing of GBP500,000 in
November 2019. As such, the Directors have a reasonable expectation
that the Company can or will obtain sufficient resources to
continue operating for the foreseeable future.
In forming this judgement, the Directors reviewed the Group's
funding, budget and business plan for the twelve months from
signing the financial statements. The Directors have relied upon
the critical assumption that the Group will be able to achieve the
key milestones of the business plan, notably with regard to
securing an acquisition or acquisitions which will constitute a
reverse takeover, which they believe will result in the
availability of adequate additional funding.
The Directors have concluded that to the extent that these
assumptions are not valid, there exists a material uncertainty that
casts significant doubt upon the Group's and the Company's ability
to continue as a going concern. Nevertheless after making
enquiries, and considering the uncertainties to assumptions
described, and based on the relevant facts and information
available on the date the financial statements were approved by the
Board, the Directors consider these assumptions to be valid and as
such they continue to adopt the going concern basis in preparing
the financial statements.
Basis of consolidation
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Investments in Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and
the carrying value is increased or decreased to recognise the
investor's share of the change in net assets of the investee after
the date of acquisition.
The Group's share of post-acquisition profit or loss is
recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is
recognised in other comprehensive income with a corresponding
adjustment to the carrying amount of the investment. When the
Group's share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it
has incurred legal or constructive obligations or made payments on
behalf of the associate. Distributions received from an associate
reduce the carrying amount of the investment.
The Group has a 50% interest in the Marginal Field Development
(MFDevCo) Ltd. The Directors deem that the Group has significant
influence but not control over this entity. In accordance with IAS
28 this investment is accounted for using the equity method of
accounting. At the year end the investment balance is held at
GBPnil after deduction of the Group's share of post-acquisition
losses recognised. Following the year end and the reorganisation
approved by shareholders in November 2019, MFDevCo has been
disposed.
2. Significant Accounting Policies
The principal accounting policies have been applied consistently
throughout the year.
Segment Reporting
IFRS 8 Operating Segments requires that the segments should be
reported on the same basis as the internal reporting information
that is provided to the chief operating decision-maker. The Group
adopts this policy and the chief operating decision-maker has been
identified as the Board of Directors of the Company.
Tangible and intangible oil and gas assets
Tangible oil and gas assets relate to assets for a specific
prospect where proven reserves are known to exist. Such assets
include the development expenditure in bringing a specific prospect
into production.
Intangible oil and gas assets relate to assets for a specific
prospect without proven reserves. Such assets include exploration
costs at a specific site to locate proven reserves. At the point
where proven reserves are discovered intangible assets are
transferred to tangible assets.
Intangible assets also include expenditure on the development of
engineering solutions adopted in the Marginal Field Initiative such
that the key engineering principles of those solutions could be
easily replicated for application to other projects.
Oil and gas properties
Properties comprise payments made to obtain or extend the
working interest in a specific prospect. Property acquisition costs
are capitalised within oil and gas properties and depreciated on a
straight-line basis at the point production commences. Property
assets are reviewed on an annual basis to confirm that drilling
activity is planned and it is not impaired. If no future activity
is planned, the remaining balance of the licence and property
acquisition costs is written off. Upon determination of
economically recoverable reserves ('proved reserves' or 'commercial
reserves'), the costs are depreciated over the useful economic life
of the related prospect based on known production levels and
estimated commercial reserves.
Intangible capitalised exploration costs
Geological and geophysical exploration costs are charged against
income as incurred. Costs directly associated with an exploration
well are capitalised as an intangible asset until the drilling of
the well is complete and the results have been evaluated. If
hydrocarbons are not found, but it is deemed possible that further
expenditure on the drilled well will lead to a hydrocarbon
discovery, the costs associated with the well continue to be
capitalised as an intangible asset.
Until the commencement of further expenditure on the drilled
well the capitalised exploration costs will be deemed to have a
useful economic life of 5 years and will be amortised accordingly.
If the planned further activity on the well is deemed to have been
terminated, then the full value of the associated intangible asset
is written off but reinstated should the activity on the well
recommence at a future date.
If hydrocarbons are not found, and are not expected to be
discovered, the total exploration expenditure is written off. If
hydrocarbons are found and are likely to be capable of commercial
development, the costs continue to be carried as an asset. All such
carried costs are subject to technical, commercial and management
review at least once a year to confirm the continued intent to
develop or otherwise extract value from the discovery. When this is
no longer the case, the costs are written off.
When proved reserves of oil and natural gas are determined,
development is sanctioned and production (rather than testing)
commences, the relevant expenditure is transferred to development
assets within tangible fixed assets. At that point, the Company
will begin to depreciate the assets over the course of their useful
life.
Licences
Exploration licence costs capitalised within intangible assets
are reviewed at each reporting date to confirm that there is no
indication that the carrying amount exceeds the recoverable amount.
This review includes confirming that exploration drilling is still
under way or committed or that it has been determined, or work is
under way to determine, that the discovery is economically viable
based on a range of technical and commercial considerations and
sufficient progress is being made on establishing development plans
and timing. If no future activity is planned, the remaining balance
of the licence costs is written off. Upon recognition of proved
reserves and internal approval for development, the relevant
expenditure is transferred to property, plant and equipment.
Intangible capitalised development costs
Expenditure incurred on the development of solutions, processes
and systems that can be utilised within the marginal field
initiative is capitalised within tangible fixed assets as
development costs.
Intangible capitalised development costs are assessed for
impairment annually.
Impairment of tangible and intangible oil and gas assets
The Company assesses assets or groups of assets for impairment
annually. Individual assets are grouped for impairment assessment
purposes at the lowest level at which there are identifiable cash
flows that are largely independent of the cash flows of other
groups of assets. If any such indication of impairment exists, the
Company makes an estimate of the recoverable value of the asset. An
asset group's recoverable amount is the higher of its fair value
less costs to sell and its value in use. Where the carrying amount
of an asset group exceeds its recoverable amount, the asset group
is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash flows
are adjusted for the risks specific to the asset group and are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money.
Fixtures and fittings, equipment
Office furniture, fittings and equipment is stated at cost less
accumulated depreciation and any impairment losses. The initial
cost of an asset comprises its purchase price, any costs directly
attributable to bringing the asset into operation, the initial
estimate of any decommissioning obligation, if any, and, for
qualifying assets, borrowing costs.
Office furniture, fittings and equipment is depreciated on a
straight-line basis over its expected useful life. The useful life
of the Company's office furniture, fittings and equipment is as
follows:
Office equipment 3 to 15 years
Office furniture, fixtures and 5 to 15 years
fittings
Other long-term assets
Long term assets usually in the form of deposits or investments,
are recognised initially at fair value and subsequently measured at
amortised cost less any provisions for impairment. A provision for
impairment is established when there is objective evidence that the
Company will not benefit from cash flows of an amount at least
equal to the carrying value of the asset.
Financial instruments
Financial assets
All of the Group's financial assets are held within a business
model whose objective is to collect contractual cash flows which
are solely payments of principals and interest and therefore
classified as subsequently measured at amortised cost. The Group's
and Company's financial assets include cash and cash equivalents
and trade and other receivables.
The Group assesses on a forward-looking basis the expected
credit losses, defined as the difference between the contractual
cash flows and the cash flows that are expected to be received.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest of the assets of the Group after deducting all of
its liabilities.
Trade and other payables
Trade payables are non-interest bearing and are stated initially
at fair value and then amortised cost.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Asset retirement provisions
The fair value of estimated asset retirement provisions related
to well sites is recognised as a liability when new wells are
drilled. The asset retirement cost is recorded as part of the cost
of the related long-lived asset at an amount that is equal to the
initial estimated fair value of the asset retirement provision.
Fair value is estimated using the present value of the future
estimated cash flows, adjusted for inflation, using the Company's
risk-free interest rate.
Changes in the estimated provision resulting from revisions to
estimated timing or amount of undiscounted cash flows are
recognised as a change in the asset retirement provision and the
related asset retirement cost. Actual retirement expenditures
incurred are charged against the provisions in the period incurred.
Over provisions and under provisions are set off against profit for
the period in which the over or under provision is recognised.
Employee Benefit Trust
The assets and liabilities of the Employee Benefit Trust are
brought onto the Statement of Financial Position of the Company.
Shares held by the trust are consolidated as a deduction from
equity. This policy applies to both the Company and the Group.
Performance Share Plan costs
The fair value of awards granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is
measured at grant date, using an appropriate pricing model taking
into account the terms and conditions upon which the award was
granted, and is spread over the period during which the awards
vest. The amount recognised as an expense is adjusted to reflect
the actual number of share awards that vest in the same period. At
each reporting date, the Company revises its estimates of the
number of options that are expected to vest. The Company recognises
the impact of the revision to original estimates, if any, in the
income statement, with a corresponding adjustment to equity.
Foreign currency translation
The Company's functional currency is sterling. Enegi Oil Inc.'s
and Enegi Finance Limited's (both subsidiaries at the reporting
date) functional currency is Canadian dollars. The Group's
presentation currency is sterling.
In preparing the financial statements of the individual
companies, transactions in foreign currencies other than the
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the reporting date.
Exchange rate differences arising on the settlement of monetary
items and on the retranslation of monetary items are included in
profit or loss for the period. Exchange rate differences arising on
the retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
On consolidation, the assets and liabilities of the Group's
foreign operations are translated at exchange rates prevailing on
the reporting date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the rate
at the date of the transaction is used.
Exchange differences that arise on long term intra-Group loans
are recognised in the income statement in the individual financial
statements of each Group company.
Income taxes
Current income tax assets and liabilities for the current and
prior period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date.
Share capital
Issued share capital is recorded in the Statement of Financial
Position at nominal value with any premium at the date of issue
being credited to the share premium account.
Share-based transactions
From time to time, the Company may pay for goods or services
through the issue of new shares. The cost of such equity-settled
transactions is recognised in the income statement, together with a
corresponding increase in equity, in the period during which the
goods or services are received.
The value of such share-based payments is measured by reference
to the fair value of the goods or services received or the market
value of the shares issued, whichever value is more readily
determinable.
Warrants
From time to time, the Company may issue warrants to suppliers
as partial payment for goods or services or to investors or
advisers in relation to the raising of new equity finance. When
warrants are issued as partial payment for goods or services
related to operations, the fair value of those warrants is
recognised as a cost in the income statement. When warrants are
issued in relation to the raising of new equity finance, the fair
value of those warrants is set off against share premium. Warrants
issued but not exercised are held in a warrant reserve within
equity.
Investment in subsidiary undertakings
Investments in subsidiary undertakings are recorded at cost plus
incidental expenses less any provision for impairment. Impairment
reviews are performed by the Directors when there has been an
indication of potential impairment.
Critical accounting judgements and estimates in applying the
Group's accounting policies
The preparation of consolidated financial statements in
conformity with IFRS requires management to make judgements and
estimates that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates. In the process of
applying the Group's accounting policies, management have made the
following estimates that may have a significant effect on the
amounts recognised in the financial statements:
Estimates:
Asset retirement obligation provision: A provision is recorded
where a present obligation (legal or constructive) arises as a
result of a past event, it is probable that settlement of the
obligation will be required and that a reliable estimate of the
amount thereof can be made. There is uncertainty around the cost of
decommissioning as cost estimates can vary in response to many
factors, including from changes to market rates for goods and
services, to the relevant legal requirements, the emergence of new
technology or experience at other assets. The expected timing, work
scope, amount of expenditure and risk weighting may also change.
The recording of provisions is an area which requires the exercise
of management's judgement. The Group's balance sheet includes
provisions in relation to Enegi Oil Inc.'s future obligation to
comply with provincial laws of abandonment. This provision is based
on a series of assumptions and estimates which are set out in Note
9.
Finance Costs: Finance costs include costs associated with the
Company's management of cash, cash equivalents and debt. To the
extent interest expense on borrowings are included within finance
costs, the interest expense is calculated using the effective
interest rate method. Historically, the financing costs associates
with the Shard loan used the simple interest method of calculation.
In 2019, the basis for estimating the finance expense was refined
to use compound interest on the outstanding loan and interest. This
basis reflects the loan value confirmed in October 2019. The effect
of estimating the interest expense on this basis when compared with
a simple effective interest method was additional expense of
GBP608,000.
Judgements:
Impairment of tangible and intangible oil and gas assets: The
Company assesses assets or groups of assets for impairment
annually. Individual assets are grouped for impairment assessment
purposes at the lowest level at which there are identifiable cash
flows that are largely independent of the cash flows of other
groups of assets. If any such indication of impairment exists, the
Company makes an estimate of the recoverable value of the asset. An
asset group's recoverable amount is the higher of its fair value
less costs to sell and its value in use. Where the carrying amount
of an asset group exceeds its recoverable amount, the asset group
is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash flows
are adjusted for the risks specific to the asset group and are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money.
Impairment of Investments: The Company assesses the carrying
value of its investment in all entities in which it holds an equity
interest on an annual basis. It considers impairing such
investments if the underlying value of the investment is deemed to
not support the carrying value of the investment.
Going Concern: The financial information has been prepared
assuming the Group will continue as a going concern. The basis to
which the Directors have formed this critical accounting judgement
is further outlined in note 1 of the Group's accounts.
3. Segmental Information
IFRS 8 Operating Segments requires that the segments should be
reported on the same basis as the internal reporting information
that is provided to the chief operating decision-maker. The Group
adopts this policy and the chief operating decision-maker has been
identified as the Board of Directors of the Company. The Directors
consider there to be two operating and reportable segments, being
that of the development of the non-Canadian based Oil and Gas
opportunities and the operations in western Newfoundland. Internal
reports reviewed by the Board provide information to allow the
chief operating decision-maker to allocate resources and make
decisions about the operations.
Over the past year, given the state of the Group's operations,
the chief operating decision maker relies primarily on an
understanding of the cash requirements of the business to make
decisions about how resources are to be allocated across the
business. The recent decision to not commit further investment into
Enegi Oil Inc. together with an assessment as to the potential
future economic benefit from the portfolio held by Enegi Oil Inc
has given rise to the full impairment of intangible assets held in
Enegi Oil Inc.
The operations in western Newfoundland are conducted by Nu-Oil
and Gas plc's wholly owned subsidiary Enegi Oil Inc. Its reported
loss for the period is GBP824,000 (2018: GBP134,000), excluding
intercompany items after charging depreciation amortisation and
impairments to intangible assets which totalled GBP332,000 (2018:
GBP115,000). No interest revenue or expense was generated or
incurred. Given the trading losses, no income tax expense has been
incurred.
Excluding intercompany balances, the net assets of Enegi Oil
Inc. at 30 June 2019 are as follows
GBP'000 Note 2019 2018
------------------------------ ----- --------------- -------------
Non-current assets
Tangible assets 3 4
Intangible assets - 326
Other long-term assets 500 477
------------------------------------- --------------- -------------
503 807
Current assets
Trade and other receivables - 34
Cash and cash equivalents - -
------------------------------ ----- --------------- -------------
Total assets 503 841
Current liabilities
Trade and other payables (247) (196)
Due to related parties (343) (183)
------------------------------------- --------------- -------------
(590) (379)
Non-current liabilities
Provisions (491) (470)
------------------------------------- --------------- -------------
Total liabilities (1,081) (849)
Net liabilities (578) (8)
------------------------------------- --------------- -------------
Subsequent to the reporting date, the Company returned the
equity interest held in Enegi Oil Inc. as described in the post
balance sheet events note 21.
4. Operating Loss
Operating loss is after charging:
GBP'000 Note 2019 2018
-------------------------------------------- ----- ----- ----
Depreciation, amortisation and impairment 1,000 341
Directors' fees 345 330
Debt provisions and recharge to MFDevCo (151) 360
--------------------------------------------------- ----- ----
Directors fees in the 2018 comparative figures are net of
GBP58,000 in recharges to MFDevCo.
Auditors' remuneration
During the year, the Group obtained various services from its
auditors, the costs of which are set out below:
GBP'000 Note 2019 2018
----------------- ----- ------------- -------------
Audit fees 30 35
Other services - -
Tax compliance 10 3
------------------------ ------------- -------------
40 38
----------------------- ------------- -------------
The tax compliance fees are payable in respect of the previous
auditor.
5. Finance costs
GBP'000 Note 2019 2018
------------------- ----- ---- ----
Interest expense 788 206
-------------------------- ---- ----
The 2019, includes the difference between the carrying value of
the loan as at 30-Jun-2018 and the carrying value of the loan at
30-Jun-2019. The carrying value of the loan at 30-Jun-19 is based
on the loan value of GBP2,500,000 agreed with C4 Energy Ltd in
October 2019.
6. Taxation
The Group has no current or deferred tax charge in the current
or previous financial year. The Group has a net unrecognised
deferred income tax asset. Differences were accounted for as
follows:
Note 2019 2018
------------------------------- ----- ------------- -------------
Statutory income tax rate 19% 19%
GBP'000
Loss for the period (2,799) (1,878)
Expected income tax recovery (532) (357)
Effect of overseas tax rates (55) (21)
Permanent difference 55 21
Transferred to losses 532 357
-------------------------------------- ------------- -------------
Total tax - -
-------------------------------------- ------------- -------------
The deferred income tax asset not recognised at 30 June 2019 is
comprised of the following:
GBP'000 Note 2019 2018
----------------------------------- ----- ------ ------
Non-capital loss carried forward 8,866 8,377
Canadian Pool Assets 1,830 1,746
Total tax 10,696 10,123
------------------------------------------ ------ ------
As at 30 June 2019, the Group had Canadian Development Expense
pool carry forward of GBP3.2 million, Canadian Exploration Expense
pool carry forward of GBP0.3 million and non-capital loss carry
forward balances of approximately GBP20.4 million (GBP1.9 million
will expire in 2026, GBP2.3 million will expire in 2027, GBP1.2
million will expire in 2028, GBP2.9 million will expire in 2029,
GBP0.8 million will expire in 2030, GBP1.4 million will expire in
2031, GBP1.1 million will expire in 2032, GBP1.7 million will
expire in 2033, GBP1.0 million will expire in 2034, GBP4.8 million
will expire in 2035, GBP0.3 million will expire in 2036, GBP0.8
million will expire in 2037 and GBP0.21 million will expire in
2038) that are available to reduce future years' taxable
income.
Subsequent to the reporting date, the Company returned the
equity interest held in Enegi Oil Inc as described in the post
balance sheet events note 21.
7. Loss per Share (Expressed in Pence)
Loss per share amounts are calculated by dividing the loss for
the year by the weighted average number of common shares in issue
during the year.
Note 2019 2018
---------------------------------------- ----- ------------- -------------
Loss attributable to shareholders
(GBP'000) (2,799) (1,878)
Weighted average number of shares
in issue 1,393,255,721 1,257,654,599
Fully diluted weighted average number
of shares in issue 1,393,255,721 1,257,654,599
----------------------------------------------- ------------- -------------
Basic loss per share (expressed in
pence per share) (0.2p) (0.1p)
Diluted loss per share (expressed
in pence per share) (0.2p) (0.1p)
----------------------------------------------- ------------- -------------
There is no difference between the basic loss per Ordinary Share
and the diluted loss per Ordinary Share for the years ended 30 June
2019 and 2018 as all potential Ordinary Shares outstanding are
anti-dilutive. There were 53,000,000 (2018:80,000,000) share
options issued which are anti-dilutive as at 30 June 2019.
8. Tangible and Intangible Assets
Tangible assets
Fixtures, Tangible
fittings O&G capitalised Group
GBP'000 and equipment properties dev costs ARO Total
----------------------------- -------------- ------------- -------------- ------------- ------------------------
Cost
1 July 17 429 3,953 14,498 810 19,690
Net additions / disposals - - - - -
Currency exchange movement - (130) (491) - (621)
----------------------------- -------------- ------------- -------------- ------------- ------------------------
30 June 18 429 3,823 14,007 810 19,069
Net additions / disposals - - - - -
Currency exchange movement - 106 388 22 516
----------------------------- -------------- ------------- -------------- ------------- ------------------------
30 June 19 429 3,929 14,395 832 19,585
Charge / impairment
1 July 17 (196) (3,953) (14,498) (801) (19,448)
Charge and impairments (46) - - (1) (47)
Currency exchange movement - 130 491 - 621
----------------------------- -------------- ------------- -------------- ------------- ------------------------
30 June 18 (242) (3,823) (14,007) (802) (18,874)
Charge and impairments (182) - - (5) (187)
Currency exchange movement - (106) (388) (22) (516)
----------------------------- -------------- ------------- -------------- ------------- ------------------------
30 June 19 (424) (3,929) (14,395) (829) (19,577)
Carrying value
30 June 18 187 - - 8 195
30 June 19 5 - - 3 8
----------------------------- -------------- ------------- -------------- ------------- ------------------------
At the reporting date, the Company had tangible assets with a
carrying value of GBP5,000 (30 June 2018 GBP187,000). These are
shown as fixtures, fittings and equipment in the above table.
Intangible assets - Group
Intangible Capitalised
capitalised exploration Group
GBP'000 dev costs costs Licenses Total
----------------------------- ------------- ------------- ------------- -------------
Cost
1 July 17 899 1,986 486 3,371
Net additions / disposals - - - -
Currency exchange movement - (67) (16) (83)
------------------------------ ------------- ------------- ------------- -------------
30 June 18 899 1,919 470 3,288
Net additions / disposals - - - -
Currency exchange movement - 53 13 66
------------------------------ ------------- ------------- ------------- -------------
30 June 19 899 1,972 483 3,354
Charge / impairment
1 July 17 (229) (1,533) (486) (2,248)
Charge and impairments (179) (115) (294)
Currency exchange movement 51 16 67
------------------------------ ------------- ------------- ------------- -------------
30 June 18 (408) (1,597) (470) (2,475)
Charge and impairments (491) (322) - (813)
Currency exchange movement - (53) (13) (66)
------------------------------ ------------- ------------- ------------- -------------
30 June 19 (899) (1,972) (483) (3,354)
Carrying value
30 June 18 491 322 - 813
30 June 19 - - - -
------------------------------ ------------- ------------- ------------- -------------
At the reporting date, the Company had intangible assets with a
carrying value of GBPnil (30 June 2018 491,000). These are shown as
fixtures, fittings and equipment in the above table.
During the year, the Directors conducted a review of the
carrying value of the Group's tangible and intangible fixed assets
and have concluded there is nil recoverable economic value from its
intangible assets. The Group's intangible assets consisted of
assets held via its subsidiary in western Newfoundland and other
capitalised development assets associated with, inter-alia,
advanced buoy technology. None of these are expected to generate
future economic benefit for the Group and therefore have been fully
impaired.
9. Provisions
Under the terms of the lease and licence, the Company's
subsidiary Enegi Oil Inc has an obligation to comply with the
provincial laws of abandonment. This involves closing in any wells
and removing the well-head equipment, removing any buildings,
engineering structures, materials and waste from the site and then
replanting the land to restore it to its original condition. It is
not expected that the liability contemplated by the provision would
be payable before 2023 as PL2002-01(A) was extended until 11 August
2022.
This future obligation for Enegi Oil Inc is recognised in the
consolidated statement of financial position as a provision. The
following table presents the reconciliation of the beginning and
ending aggregate carrying amount of the obligations associated with
the retirement of the oil and gas assets:
GBP'000 Note 2019 2018
----------------------------------- ----- --------- ----------
Balance at start of year 470 489
Currency translation differences 25 (15)
Unwinding of discount rate (4) (4)
------------------------------------------ --------- ----------
Balance at end of year 491 470
------------------------------------------ --------- ----------
At 30 June 2019, the estimated future cash flows required to
settle this obligation totalled GBP491,000. Assuming an inflation
rate of 2.0%, the undiscounted future cost of this obligation was
GBP514,000. The liability for the expected cash flow requirement
has been discounted using the Company's risk-free rate of 1.5%.
This obligation will be settled based on the operating lives of the
underlying assets, which currently are estimated to be from one to
fifteen years with the majority of costs expected to occur between
2022 and 2023. Any final amounts to be settled will be funded from
general corporate resources when they fall due.
Subsequent to the reporting date, the Company returned the
equity interest held in Enegi Oil Inc. as described in the post
balance sheet events note 21.
10. Other Long-Term Assets and Investments
Long-term assets
GBP'000 Note 2019 2018
------------------------- ----- ---- ----
License deposits 500 477
Balance at end of year 500 477
-------------------------------- ---- ----
The licence deposits are held by the relevant regulatory body.
They were paid over when the Company acquired its stakes in the
lease and licence and will either be returned at the expiry of the
lease and licence or set off against royalty payments if and when
they become due.
The majority of the licence deposits relate to the Company's
activities on production lease PL2002-01 in western Newfoundland.
The production lease expired in August 2012 and as the lease
contained a producing well, production lease PL2002-01(A) was
issued which expires in August 2022 following the recent award of a
5-year extension to the expiry of PL2002-01(A).
Company investments
GBP'000 Note 2019 2018
----------------------------------------- ----- ------------- -----
Investment in Group companies at start
of year 326 478
Impairment (326) (152)
Investment in Group companies at end
of year - 326
------------------------------------------------ ------------- -----
During the year, the Directors conducted a review of the
carrying value of the Company's other long-term assets, which
consists of investments in Group companies and in MFDevCo as
described in note 21. The balance represents the carrying value of
the investment in Enegi Oil Inc. Impairment in the period reflects
the application of the Group's accounting policy with respect to
the amortisation of Enegi Oil Inc.'s capitalised exploration
costs.
The Group holds a 50% interest in MFDevCo in which it has
invested as part of its marginal or stranded field strategy. Its
investment has been accounted for using the equity method and as is
deemed at this point to have zero value as the cumulative losses in
MFDevCo exceed the investment that has been made by the Group.
Losses at this stage of MFDevCo's development are as expected as
MFDevCo seeks to establish itself.
11. Trade and Other Receivables
Trade and other receivables
GBP'000 Note 2019 2018
------------------------------------ ----- ------------- ----
Sales taxes receivables - 178
Prepayments and other receivables 1,165 815
1,165 993
------------------------------------------ ------------- ----
The trade and other receivables showing in the Company's
statement of financial position relate to sales taxes receivable of
GBPnil (2018: GBP168,000) and prepayments and other receivables of
GBP1,165,000 (2018: GBP790,000).
The Group's other receivables relate to services provided to
MFDevCo as part of its marginal field strategy. The Group expects
these balances to settle by way of offset against amounts owed to
RMRI as a part of the reorganisation announced in October. As a
part of that reorganisation, the Group has no obligations to
contribute to any excess losses or creditors that reside within
MFDevCo. As a result, the impairment provision in 2018 was reversed
in the current year period.
12. Related Party Transactions
Group
The Group incurred the following charges in the year with
companies or related persons either by way of Directors or common
shareholders.
GBP'000 Note 2019 2018
------------- ----- ---- ----
RMRI Group 367 208
367 208
------------------- ---- ----
The transactions above include Directors' Fees and Termination
Costs of GBP251,000 incurred in 2019 (2018:150,000). Transactions
occurred in the normal course of operations and, where applicable,
are measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties.
The balances owed to related parties outlined below are
unsecured, not guaranteed, and are to be settled under as a part of
the restructuring changes announced October 2019.
GBP'000 Note 2019 2018
------------------- ----- ---- ----
RMRI Group (UK) 464 358
RMRI Canada Inc. 193 183
657 541
------------------------- ---- ----
In addition to the above, GBP556,000 (2018: GBP556,000) is
recorded in the Company's accruals as Applications for Payment but
not yet invoiced. Applications for Payment are utilised where there
is uncertainty with respect to the timing of payment so as to not
generate a VAT liability for the service provider until payment is
made.
Company
In 2019 the Company was owed an additional GBP151,000 by its
principal trading subsidiary, Enegi Oil Inc. As a result of the
trading performance of Enegi Oil Inc. the Company has provided in
full against this receivable and as such the amount carried at both
30 June 2019 and 30 June 2018 was GBPnil.
Amounts owed by the Company to the companies listed above
totalled GBP469,000 (2018: GBP358,000). During the year the Company
incurred charges of GBP93,000, excluding Directors' fees from the
RMRI Group companies.
13. Ordinary Share Capital and Share Premium Account
In October 2015, the Company undertook a reorganisation of its
share capital. Under the Companies Act 2006 a company is unable to
issue shares at a subscription price which is lower than the
nominal value. Therefore, in order to raise additional funding a
reorganisation of the Company's share capital was performed.
The reorganisation subdivided existing shares into new ordinary
shares with a nominal value of GBP0.001 and deferred shares with a
nominal value of GBP0.009. The deferred shares, amongst other
things, are not traded, do not receive dividends and do not have
voting rights. The issue of new ordinary shares will not require
the issuance of deferred shares to new subscribers. At the time of
the reorganisation 189,792,348 shares were in circulation.
Number of Ordinary
shares Share capital
Note 000's GBP'000
-------------------------------------- ----- --------- --------------
Issued ordinary shares of 0.1p each 1,498,727 1,499
Issued deferred shares of 0.9p each 189,792 1,708
--------------------------------------------- --------- --------------
The weighted average number of ordinary shares in issue during
the year was 1,393,255,721 (2018: 1,257,654,599).
The movement in share capital and share premium in the current
is as follows:
Deferred Ord. Share Share
Ord. Shares Shares Capital Premium Total
Note 000's 000's GBP'000 GBP'000 GBP'000
-------------------------- ------ ----------- -------- ---------- -------- --------
Balance, 1 July 2018 1,364,027 189,792 3,072 31,062 34,134
Share issue and warrant
exercise 134,700 - 135 297 432
Effect of warrants - - - - -
Balance, 30 June 2019 1,498,727 189,792 3,207 31,359 34,566
---------------------------------- ----------- -------- ---------- -------- --------
Included in shares issued and fully paid are 860,000 shares
issued to the Employee Benefit Trust.
At 30 June 2019, the warrants relating to the Company's ordinary
share capital had been issued:
Exercise
Price
Note Ord.Shares GBP GBP Expiry
----------------------------- ----- ---------- -------- -----------
Warrants: Company's Nomad 9,416,885 0.0063 6 Nov. 2021
28 Mar.
Warrants: Company's Broker 13,043,478 0.0115 2021
Warrants: Company's Broker 8,333,333 0.0003 3 Apr. 2024
Warrants: Company's former 26 Jul.
Broker 10,000,000 0.0110 2022
------------------------------------ ---------- -------- -----------
14. Net debt
Notes YA Global Shard Loan Total
------------------------------- ------- --------- ---------- -------
Balance 1 July 2017 (281) (1,780) (2,061)
Cash flows - repayments 108 858 966
Movements in accrued interest (10) (721) (731)
---------------------------------------- --------- ---------- -------
Balance 30 June 2018 (183) (1,643) (1,826)
Cash flows - repayments 15 38 53
Movements in accrued interest (13) (776) (789)
---------------------------------------- --------- ---------- -------
Balance 30 June 2019 (181) (2,381) (2,562)
---------------------------------------- --------- ---------- -------
On 25 November 2013, the Company obtained initially a loan of
GBP1,000,000 from Shard Capital Management Limited ('Shard'). Under
the terms of the loan, which had a duration of 12 months, the
Company was due to pay interest totalling GBP200,000. In December
2014, the Company obtained a further loan from Shard of GBP200,000.
Under the terms agreed, the Company was due to then pay a further
GBP120,000 interest on the original loan of GBP1,000,000 from
November 2013 and GBP20,000 on the additional loan of GBP200,000
for a total interest expense in 2015 of GBP140,000. Under the terms
of the Shard loans which have expired, Shard had been granted
security over PL2002-01(A) and the Company had a right to convert
the debt to equity.
The Company continued to accrue interest on the Shard loans on a
simple interest basis and, at 30 June 2018, the carrying amount of
the loan was GBP1.643 million. In the current year, the interest
accrued has been estimated for the period based on the amount
agreed after the end of the year. This resulted in interest expense
for the year of GBP776,000.
Following the year end, the Shard Loan was sold to C4 Energy Ltd
and refinanced. Refer Post balance sheet events notes 21 for
further details.
15. Trade and Other Payables
GBP'000 Note 2019 2018
------------------------------- ----- ----- -----
Trade payables 512 481
Accruals 752 974
Taxation and social security 115 98
Other payables 61 2
1,440 1,555
------------------------------------- ----- -----
The trade and other payables shown in the Company's statement of
financial position relate to trade payables and accruals of
GBP1,132,000 (2018: GBP1,355,000), other payables GBP61,000 (2018:
GBP4,000).
16. Contingent Liability
Subsequent to the reporting date, Enegi Oil Inc. ('EOI')
received notice that PVF Energy Services Inc. ('PVF') submitted a
Statement of Claim to the Supreme Court of Newfoundland and
Labrador General Division ('the Claim') on 26 June 2019 against
EOI. The Claim was for costs incurred by PVF in carrying out the
work programme under the terms of the Production Sharing Agreement,
an agreement to which PVF and EOI were party. The Production
Sharing Agreement states that PVF will carry out the work programme
'at its sole cost, risk and perils' and that costs properly
incurred in carrying out the programme are reimbursable out of
production from a well and not by Enegi Oil Inc. Furthermore, the
PSA sets out the process for the resolution of a dispute or claim
arising out of the agreement; that process was not followed by PVF
in submitting the Claim. The amount of the Claim was CAD
$1,122,000. At the time the Claim was received, the incumbent Board
reviewed the situation and concluded that the Claim had no merit
and was against the terms of the agreement with PVF as set out in
the RNS of 10 July 2019.
Following changes to the Board since the Claim was made and
taking into account the recent return of the EOI shares by Nu-Oil
and Gas plc, the current Board believes that the possibility of any
outflow in settlement of the Claim by the Company is remote.
Accordingly, the current Board has concluded that no provision is
required in the financial statements at 30 June 2019.
17. Cash Used in Operations
Consolidated
GBP'000 Note 2019 2018
--------------------------------------------- ----- ------------- -------
Loss before income tax (2,799) (1,878)
Increase/(decrease) in related party
payable 117 (503)
Increase/(decrease) in trade and
other payables (64) (57)
Depreciation, amortisation and impairment 1,000 341
Decrease/(increase) in receivables (172) (71)
Other non-cash movements - 12
Financing activities increase / (decrease) 788 -
Cash flows used in operating activities (1,130) (2,156)
---------------------------------------------------- ------------- -------
Company
GBP'000 Note 2019 2018
--------------------------------------------- ----- ------- -------
Loss before income tax (2,698) (1,954)
Decrease in related party payable 105 (497)
Increase/(decrease) in trade and
other payables (114) (31)
Depreciation, amortisation and impairment 996 (51)
Decrease in receivables (207) 377
Financing activities increase / (decrease) 788 -
Cash flows used in operating activities (1,130) (2,156)
---------------------------------------------------- ------- -------
18. Performance Share Plan
The Company commenced the operation of a Performance Share Plan
which is an equity incentive scheme at the time of the Company's
initial public offering in March 2008. The Remuneration Committee
oversees the Performance Share Plan, approves the subscription
price of awards under the Plan and any criteria to be satisfied
before exercise is permitted, and monitors the effectiveness of the
Performance Share Plan as an incentive to the executives and
staff.
Under the terms of the Plan, an employee benefit trust ('EBT')
subscribed for ordinary shares in the Company. The trust is
administered by Appleby Limited. The trustee can distribute shares
at its discretion directly to beneficiaries on the recommendation
of the Board. All administrative costs associated with the EBT are
met by the Company. The Employee Benefit Trust owns shares to be
distributed at the discretion of the trustees and the employee owns
any value in the shares in excess of the subscription price.
On 20 March 2008, the Company placed 860,000 shares into the
EBT. The market price of the shares was GBP1.81 each and the market
value of the shares was GBP1,556,600. At 30 June 2019, the EBT
jointly owned 860,000 shares in the Company with a nominal value of
GBP8,600, representing 0.6% of the allotted share capital of the
Company. None of the shares held were under option or conditionally
gifted.
Under the Performance Share Plan, the options outstanding to
Directors, as approved by the Company's Remuneration Committee at
the reporting date, is as follows:
Vested Expired Exercise
Notes Options Options Total Price (GBP)
------------------ ------- ---------- ------------ ---------- ------------
Alan Minty 20,000,000 20,000,000 - 0.0060
Graham Scotton 1,000,000 - 1,000,000 0.0067
Damian Minty 20,000,000 - 20,000,000 0.0060
Tejvinder Minhas 20,000,000 - 20,000,000 0.0060
Frank Jackson 8,000,000 - 8,000,000 0.0060
Mike Bowman 4,000,000 - 4,000,000 0.0060
--------------------------- ---------- ------------ ---------- ------------
The remaining weighted average contractual life of the
53,000,000 options outstanding at 30 June 2019 was 2.7 years. The
volume weighted average share price for 2019 was GBP0.0225.
19. Employees and Directors
GBP'000 Note 2019 2018
----------------------------------- ----- ---- ----
Employees 222 98
Directors 345 330
Social Security Costs and Taxes 45 46
------------------------------------------ ---- ----
612 474
----------------------------------------- ---- ----
Average monthly number of people
employed 5 5
------------------------------------------ ---- ----
Excluding settlement and termination costs, the largest Director
emoluments for the year were GBP120,000 (2018: GBP160,000). The
table above has reclassified GBP120,000 of costs relating to Damian
Minty from employee costs into Directors costs in the 2018
comparative figures. In addition, the 2018 comparative figures are
net of GBP58,000 in recharges to MFDevCo.
20. Financial Instruments
The Company's principal financial instruments comprise cash,
trade and other receivables, trade and other payables and accruals
and amounts owed to related parties. The carrying values of the
Company's financial instruments approximate their fair values due
to the short-term maturity and normal trade credit terms of these
instruments.
21. Subsidiary Companies and Investments
Principal Group investments
The full list of Group investments as at 30 June 2019 are
disclosed below. Other than the effect of foreign exchange,
transactions between subsidiaries and between the parent Company
and its subsidiaries are eliminated on consolidation.
Country Type Subsid Group
Name Nature of business of Incorp of shares / Investm't Holding
-------------------- ----------------------- ----------- ----------- ------------- ----------
Enegi Finance Intra-Group finance
Ltd provider UK Ordinary Subsidiary 100%
Gestion Resources Working interest UK Ordinary Subsidiary 100% via
Ltd holder Enegi Oil
Inc.
Principal operating
Enegi Oil Inc subsidiary Canada Ordinary Subsidiary 100%
Marginal field
MFDevCo development solutions UK Ordinary Investment 50%
-------------------- ----------------------- ----------- ----------- ------------- ----------
All investments are held at cost less any provision for
diminution in value.
The registered office of each company is as follows:
Address
------------------- ---------------------------------------------------------
Enegi Finance 5th Floor, Castlefield House, Liverpool Road, Manchester,
Ltd M3 4SB
Gestion Resources 5th Floor, Castlefield House, Liverpool Road, Manchester,
Ltd M3 4SB
Enegi Oil Inc 36, Quidi Vidi Road, St. Johns, Newfoundland
MFDevCo 5th Floor, Castlefield House, Liverpool Road, Manchester,
M3 4SB
------------------- ---------------------------------------------------------
Subsequent to the year end the equity held in Enegi Oil Inc has
been returned to Enegi Oil Inc for nil consideration.
22. Post balance sheet events
A number of events have occurred since the reporting date as
follows:
On 2 October the Company announced a series of changes to the
Board of Directors, a debt restructuring, a placing and the sale of
the joint venture, summarised as follows:
Board restructuring
Following the passing of the resolutions at the general meeting
on 4 November 2019, Jay Bhattacherjee was appointed as
Non-Executive Chairman and Andrew Dennan was appointed as
Non-Executive Director. Graham Scotton, previously Executive
Chairman, transitioned to Non-Executive Chairman and Frank Jackson
has remained as a Non-Executive Director. Damian Minty, Joint
Managing Director and Chief Financial Officer, and Alison Pegram,
Joint Managing Director, agreed to resign their roles standing down
from the Board, with immediate effect and Non-Executive Directors,
Professor Michael Bowman and Mr Tejvinder Minhas, also resigned
with immediate effect. On 13 November Mr Graham Scotton resigned
from his position as Non-Executive Director with immediate
effect.
Debt restructuring
The Company was informed by Shard Capital Management Limited
('Shard') that it has sold the loan which was owed to it by Nu-Oil
to C4 Energy Ltd ('C4'), a UK incorporated private company.
Non-Executive Chairman Jay Bhattacherjee and Non-Executive Director
Andy Dennan are shareholders of C4. Following the sale of the debt,
the Company granted C4 loan notes to the value of GBP2,500,000 in
GBP10,000 denominations. The Loan Notes are unsecured, interest
free and have a five-year term, with repayment due at the end of
term. In addition, the loan notes have conversion rights, at a
price of 0.05 pence per ordinary share, although they contain a
restriction preventing conversion of such amount that would result
in C4 holding more than 29.9% of the Company's issued share capital
from time to time.
Sale of interest in Marginal Field Development Company
The Company also agreed to sell its 50% interest in Marginal
Field Development Company (MFDevCo) Ltd to RMRI Limited (the
related party, which holds the remaining 50% interest in MFDevCo)
in consideration for the release of all outstanding related party
debts. Amounts owing to the RMRI Group are shown in amounts due to
related parties of GBP657,000 and within accruals of GBP556,000
which forms part of the trade and other payables balance within the
consolidated statement of financial position.
Placing
Following the passing of the resolutions at the General Meeting
Company on 04 November 2019, the Company raised, via a placing,
gross proceeds of GBP0.5million, the net proceeds of which would be
used for working capital purposes.
Return of interest in Enegi Oil Inc.
In addition, on 21 October 2019, the Company announced it has
returned the equity it held in Enegi Oil Inc. ('Enegi') to Enegi
with immediate effect. The impact of this is that the assets and
liabilities of Enegi Oil Inc. will no longer be controlled the
Nu-Oil and Gas Plc Group; the most significant of which are the
licence deposits held in long-term assets, and the provisions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UOUORKRAUUAA
(END) Dow Jones Newswires
December 23, 2019 08:23 ET (13:23 GMT)
Nu-oil And Gas (LSE:NUOG)
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