TIDMWTE
RNS Number : 6536Q
Westmount Energy Limited
29 October 2021
29 October 2021
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the
year ended 30 June 2021, and hereby gives notice that the Annual
General Meeting of Westmount Energy Limited will be held at No 2
The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel
Islands on 9 December 2021 at 11.00.
Copies of the Company's results and Notice of AGM are available
on the Company's website, www.westmountenergy.com, and will be
posted to shareholders today.
CHAIRMAN'S REVIEW
2021 Highlights
-- High quality reservoirs identified in first drilling campaign
on Kaieteur and Canje blocks - but no standalone commercial
discoveries to date(1)
-- Tanager-1 Discovery contains gross 65.3 MMbbls (42.7 MMbbls
Net to Kaieteur Block) contingent resources (2C, unrisked)(2) in
high quality Maastrichtian reservoir - but is non-commercial as a
standalone development
-- Detailed analysis and integration of multi-play drilling
results and newly acquired sub-surface data into regional petroleum
system models to high-grade potential follow-on drilling
targets
-- Applications for environmental authorisation submitted by
operator to the Guyanese EPA with respect to potential new drilling
programs on the Canje and Kaieteur blocks from 2022
-- Shares commenced cross trading on the US OTCQB market under the ticker symbol "WMELF"
-- Final repayment of the 10% Convertible Unsecured Loan Notes
2021; the company is now debt free
-- Cash balance of GBP1.2M at year end, 30 June 2021
Global economic recovery, the ebb and flow of the COVID-19
pandemic, an accelerating energy transition in parallel with an
Opec+ stabilization of oil markets have been the central themes in
the upstream sector over the past 12 months. The green shoots of
economic recovery that were in evidence in the second half of 2020
have continued to sprout in 2021. Vaccination programs and
improving management strategies are pointing towards light at the
end of the pandemic tunnel. Increasing economic activity,
population mobility and oil demand, combined with OPEC+ supply
discipline, has driven a sustained oil price rally over this period
with Brent crude trading consistently above US$80/bbl since the
start of October. While the clean energy transition has also gained
momentum during this period, the redirected capital flows and poor
regional performance of some renewable sources (wind and hydro)
during summer 2021 have had some unintended consequences - such as
gas shortages in Europe and Asia boosting demand for crude - while
adding significantly, at least in the near term, to gas and oil
pricing pressures. So, while pandemic threats remain in the form of
mutant strains, other economic threats are now moving centre stage
- such as rising inflation driven by rebound demand and spiking
energy prices - together with uncertainties around future energy
policies, the pace and direction of decarbonisation and energy
capital allocation decisions in the face of an array of
technologies with variable cost, carbon and reliability profiles,
not to mention societal impacts. As the 'unintended consequences'
in 2021 have shown energy transition is complex and
multi-dimensional which suggests that reliable sources of energy
such as low cost, low carbon oil and gas that can be rapidly
commercialised, will have a role to play in the energy system for
decades to come.
During the last 12 months the development of the upstream sector
in Guyana has continued to power ahead making Guyana the world's
fastest growing economy in 2020 with standout economic growth of
over 40%. Building on the foundations of a world class petroleum
province the country continues its transformation towards a
significant oil producing nation - with potential for the
installation of at least 6 Floating Production Storage and
Offloading (FPSO) units on the Stabroek Block by 2027 and a
discovered resource inventory, to date, which underpins up to 10
FPSOs(3) . Three of these FPSOs are already operating or are under
construction - with the Liza Phase 1 (Destiny FPSO) reaching its
plateau production rate of 120,000 BOPD during the past year, Liza
Phase 2 (Unity FPSO) about to commence installation and hook-up
offshore Guyana and on track to achieve first oil in early 2022,
with a capacity of 220,000 BOPD and with a third field development,
Payara (Prosperity FPSO), also with 220,000 BOPD capacity,
undergoing topsides fabrication at drydock in Singapore and
targeting first oil in 2024. In addition, it is anticipated that
the Stabroek consortium will submit to the government a 4(th)
development plan, for the Yellowtail discoveries, by the end of
2021, targeting a gross production capacity of 220,000-250,000 BOPD
and first oil in 2025. At this stage a number of follow-on
developments are also envisaged including development of the
Mako/Uaru and Whiptail discoveries, subject to government approvals
and project sanctioning(4) .
Six years on since the world-class Liza-1 discovery, the
Guyana-Suriname Basin continues to manifest the hallmarks of a
prolific emerging hydrocarbon province. With more than 50 wells
drilled in the basin since 2015, in excess of 11 billion oil
equivalent barrels discovered between Stabroek and Block 58 (with
estimated 70% oil or liquids)(5) and a total basin potential now
estimated to be more than twice the discovered resource(6) , the
basin continues to be an outlier in terms of global exploration
performance and investment growth. Large prospects, high success
rates and continuous aggressive exploration and appraisal drilling
has catapulted Guyana to the number three position for proven oil
reserves in the Latin America-Caribbean region(7) .These advantaged
barrels, characterised by low breakeven costs, low carbon emissions
and potential for rapid commercialisation, are likely to continue
to make Guyana a preferred destination for deepwater exploration
and production investment.
In October 2021, on the back of a string of exploration
successes, estimates of gross discovered resources to date on the
Stabroek Block alone have been revised upwards to approximately 10
billion barrels of oil equivalent(8) . Successful exploration and
appraisal wells reported during the last 15 months include
Redtail-1, Yellowtail-2, Uaru-2, Mako-2, Longtail-3, Turbot-2,
Whiptail-1, Whiptail-2, Pinktail-1 and Cataback-1 bringing the
total number of reported significant discoveries to date on the
Stabroek Block to twenty-one. In addition, circa 15m of oil
bearing, Santonian, sandstone was reported in the Hassa-1 well,
which is located proximal to the Canje block boundary. These
frenetic activity levels are supported by the current deployment of
six drillships, offshore Guyana, with a 7th drillship plus one
semi-submersible rig operating offshore Suriname.
In the Surinamese sector, at the south-eastern end of the basin
two additional stacked pay discoveries were announced by the
Total/Apache consortium in Block 58, during this period -
Kwaskwasi-1 and East Keskesi-1 - bringing the number of reported
discoveries on the block to four. These discoveries reported light
oil and gas-condensate pay in the shallower Campanian reservoirs
overlying light oil pay in deeper Santonian reservoirs. Appraisal
of these discoveries has commenced, with Total as operator,
targeting FID for the first development in early 2022 and first oil
by the end of 2025. Initial appraisal progress has been mixed with
early success at Sapakara South-1, disappointments at Kwaskwasi and
Keskesi East-1, and the general challenges around valorization of
large associated gas volumes. In December 2020, Petronas announced
a discovery at the Sloanea-1 exploration well on Block 52, where
several hydrocarbon-bearing sandstone packages with good reservoir
qualities were encountered in the Campanian.
Exploration drilling results continue to support the presence of
multiple plays, quality reservoirs and the potential for
stacked-pay drilling opportunities within the basin. Although the
Upper Cretaceous Maastrichtian-Campanian Liza play dominates in
terms of number of discoveries and discovered volumes to date the
deeper Santonian pools on Block 58, in conjunction with the deeper
hydrocarbons reported at Liza-3, Tripletail-1, Yellowtail-2,
Uaru-2, Turbot-2, Longtail-3 and Hassa-1 on the Strabroek Block,
suggest an extensive emerging deeper play fairway within the
basin.
It is against this backdrop that the first 'large step-out play
extension wells' have been drilled on the Kaieteur and Canje blocks
during the last 15 months - with results to date confirming the
presence of high-quality reservoirs and the extension of the
Cretaceous petroleum system outboard of the Liza-Sloanea trend.
Kaieteur Block
The first well on the Kaieteur block, Tanager-1, remains the
deepest well drilled in the Guyana-Suriname Basin to date. It was
spudded on the 11 August 2020, using the Stena Carron drillship.
The well was drilled in a water depth of 2,900 metres and reached a
total depth of 7,633 metres circa mid-November 2021. Evaluation of
LWD, wireline logging and sampling data confirmed 16 metres of net
oil pay (20(o) API oil) in high-quality sandstone reservoirs of
Maastrichtian age. Although high quality reservoirs were also
encountered at the deeper Santonian and Turonian intervals, initial
interpretation of the reservoir fluids was reported to be
equivocal, requiring further analysis - results of which have yet
to be disclosed. Post well analysis and integration of the data
collected continues with a view to high grading the next drilling
target on the Kaieteur block.
A post-well Netherland, Sewell & Associates Inc. ("NSAI")
published CPR (14 February 2021) indicates that the Tanager-1
Maastrichtian discovery contains a 'Best Estimate' Unrisked Gross
(2C) Contingent Oil Resource of 65.3 MMBBLs (Low to High Estimates
17.7 MMBBLs to 131 MMBBLs) - with a 'Best Estimate' Unrisked Net
(2C) Contingent Oil Resource attributable to the Kaieteur Block of
42.7 MMBBLs (Low to High Estimates 11.3 MMBBLs to 86 MMBBLs).
However, this discovery is currently considered to be
non-commercial as a standalone development.
Subsequent to the Tanager-1 discovery, on 24 May 2021, it was
announced that Hess Corporation ("Hess") had increased its working
interest ("WI") in the Kaieteur Block, offshore Guyana, from 15% to
20% via the farm-down of a 5% WI by Cataleya Energy Limited
("CEL"). Although the details of this farm-in transaction were not
disclosed this farm-in, by one of the Stabroek block partners and a
leading player in the Guyana-Suriname basin, suggests confidence in
the prospective resource potential of the Kaieteur Block and augurs
well for the continuing exploration of the area.
On the 23 August 2021 it was announced that the date for
elective nomination, by the operator, of the prospect target for
the 2nd well on the Kaieteur Block has been extended by seven
months to the 22 March 2021. The Kaieteur Block partners agreed to
this extension to facilitate continuing analysis by the operator
and integration of extensive multi-play drilling results and
comprehensive data collection programs into regional petroleum
system models and the prospect nomination decision.
Subsequently, in September 2021, the operator, ExxonMobil,
submitted an application for environmental authorization to the
Environmental Protection Agency (EPA) to proceed with a 12 well
exploration campaign on the Kaieteur Block.
The Kaieteur Block is currently operated by an ExxonMobil
subsidiary, Esso Production & Exploration Guyana Limited (35%),
with Cataleya Energy Limited ("CEL") (20%), Ratio Guyana Limited
("RGL") (25%) and a subsidiary of Hess Corporation, Hess Guyana
(Block B) Exploration Limited (20%) as partners. Westmount retains
a holding of approximately 5.3% of the issued share capital of
Cataleya Energy Corporation ("CEC") the parent company of CEL and
circa 0.04% of the issued share capital of Ratio Petroleum Energy
Limited Partnership ("Ratio Petroleum") the ultimate holding entity
with respect to RGL.
Canje Block
The first well on the Canje block, Bulletwood-1, was spudded on
the 31 December 2020 using the Stena Carron drillship and was
completed in early March. The well was safely drilled in a water
depth of 2,846 metres to its planned target depth of 6,690 meters.
The primary target in the well was a Campanian age confined channel
complex. The well encountered quality reservoirs but non-commercial
hydrocarbons. There has been limited disclosure of the well results
to date as detailed analysis of the data collected is ongoing.
However, the initial results confirm the presence of the
Guyana-Suriname petroleum system and the potential prospectivity of
the Canje Block.
Initial drilling operations at the second well on the Canje
block, Jabillo-1, commenced on the 14 March 2021 using the Stena
Carron drillship. Previously published information indicated that
Jabillo-1 was targeting a Late Cretaceous, Liza-age equivalent,
basin floor fan(9) . After interruption for a brief period of
maintenance work on the drillship drilling operations at Jabillo-1
recommenced circa the 5 June 2021 and were completed in early July.
The well was safely drilled in a water depth of 2,903 metres to its
planned target depth of 6,475 meters. The well did not encounter
commercial hydrocarbons.
The third well on the Canje block, Sapote-1, was spudded circa
the 29 August 2021, using the Stena DrillMAX drillship. This well
is located in the southeast of the Canje Block, approximately 60kms
north of the Campanian and Santonian Maka Central-1 stacked pay
discovery, in a new depositional setting linked to the Berbice
canyon system. It is an independent multi-layer prospect, with
several Upper Cretaceous targets, and is potentially the largest
prospect drilled on the Canje block to date. Drilling of Sapote-1
is anticipated to take 60 days, with results anticipated in late
October. At the time of going to press the results of the well are
pending.
Westmount holds an indirect interest in the Canje Block as a
result of its circa 7.2% interest in the issued share capital of
JHI Associates Inc. ("JHI")(10) . The company also holds an
additional indirect interest in the Canje Block as a result of its
shareholding in Eco (Atlantic) Oil and Gas Ltd. ("EOG") and
following the investment in JHI Associates Inc. ("JHI") announced
by EOG on the 28 June 2021. Subsequent to this EOG transaction and
a previous 2018 farm-out to Total JHI is fully carried/funded for
the 2021 three well drilling campaign and is also funded for the
drilling of additional wells.
The Canje Block is currently operated by an ExxonMobil
subsidiary, Esso Exploration & Production Guyana Limited (35%),
with TotalEnergies E&P Guyana B.V. (35%), JHI Associates (BVI)
Inc. (17.5%) and Mid-Atlantic Oil & Gas Inc. (12.5%) as
partners.
Orinduik Block
Westmount continues to hold an indirect interest in the Orinduik
Block as a result of its circa 0.75% interest in the issued share
capital of Eco (Atlantic) Oil and Gas Ltd. ("EOG"). Over the last
12 months the focus of the Orinduik Block JV partners has been on
the analysis and assimilation of the 2019/20 drilling results and
data gathering program, the reprocessing and re-interpretation of
the 3D seismic data, and the high grading of the Cretaceous light
oil prospect inventory with a view to the next drilling campaign on
the Orinduik Block. EOG remains fully funded for its 15% working
interest share of further planned/near term drilling on the block,
which is anticipated to commence as soon as it is practical to do
so.
The Orinduik Block is currently operated by Tullow Guyana B.V.
(60%), with TOQAP Guyana B.V. (25%) and EOG (15%) as partners.
TOQAP Guyana B.V. is jointly owned by TotalEnergies E&P Guyana
B.V. (60%) and Qatar Petroleum (40%).
Block 47, Suriname
Westmount retains a minor indirect interest in Block 47,
Suriname, via its circa 0.04% holding in Ratio Petroleum. The first
well on Block 47, the Goliathberg-Voltzberg North-1 ("GVN-1") well
was spudded circa 25 January 2021, using the Stena Forth Drillship
and was reported by the operator Tullow Oil to have reached total
depth on the 18 March 2021. The well was drilled to a total depth
of 5,060 metres in a water depth of 1,856 metres and was targeting
Turonian-Cenomanian stacked reservoirs. The well is reported to
have encountered good quality reservoir with minor oil shows and
was subsequently plugged and abandoned.
Block 47 is operated by Tullow Suriname B.V. (50%), with
Petroandina Resources Corporation N.V (30%) and Ratio Suriname Ltd.
(20%) as partners.
Portfolio Effect
Westmount's investment strategy has been to provide shareholders
exposure to a portfolio of drilling outcomes in the Guyana-Suriname
Basin. Since 2019, we have participated, indirectly via our
investee companies, in six wells (Jethro-1, Joe-1, Tanager-1,
Bulletwood-1, Jabillo-1 and Sapote-1(1) ), offshore Guyana, which
have yielded 3 oil discoveries (Jethro, Joe and Tanager), but no
standalone commercial success to date. While these initial drilling
outcomes are below our expectations for the portfolio, the results
provide encouragement and must be viewed in the context of 'large
step-out' wells evaluating giant stratigraphic prospects while
seeking to establish the perimeter of the multiple Tertiary and
Cretaceous play fairways both to the northeast and southwest of the
prolific Stabroek block.
In any case, the drilling to date has confirmed the presence of
high-quality reservoirs of various stratigraphic ages in the
Kaieteur, Canje and Orinduik areas, which are capable of supporting
deep-water developments when containing commercial volumes of light
oil. Recent public domain presentation and commentary suggests that
trap adequacy and hydrocarbon migration/timing are the key
exploration risks inferred from these initial drilling results, out
with of the Stabroek Block sweet-spot. These results together with
the analysis and synthesis of the extensive well data gathering
programs executed by the respective operators should improve
understanding of the plays, reduce sub-surface risk and inform
prospect selection for the next round of drilling on these blocks.
We remain hopeful that the geoscience learning curve combined with
the portfolio effect provided by drilling an extended sequence of
prospects in this prolific basin will win out over individual
prospect risks to yield a commercial discovery. We look forward to
the next drilling campaign across these blocks which will
potentially commence in early 2022. ExxonMobil, the operator of the
Kaieteur and Canje blocks, has already submitted an application for
environmental authorization to the Environmental Protection Agency
(EPA) with respect to potential 12 well drilling programs on both
the Kaieteur and Canje blocks.
Investment portfolio rebalancing and optimisation of exposure to
2021 drilling activity
During the period under review your company executed a number of
transactions with a view to rebalancing the investment portfolio
and optimising exposure to the more immediate and material drilling
opportunities that were presented by the scheduled three well
campaign on the Canje block in 2021.
On the 10 September 2020 the company announced that it had
purchased 1,550,000 common shares in JHI by way of the issue of
18,290,000 new ordinary shares of no par value in Westmount ("New
Ordinary Shares"), representing approximately 12.7% of Westmount's
enlarged issued share capital. This share exchange transaction was
agreed with the counterparties on the basis of a share swap metric
of 11.8 new ordinary shares in Westmount for each common share in
JHI - with Westmount shares being valued at 14.745p per share and
JHI shares being valued at CAD$3 per share.
Two additional 'cash only' JHI share purchase transactions were
also entered into by Westmount during the period under review. On
the 22 December 2020 the company announced that it had purchased
250,000 common shares in JHI at an aggregate cost of US$400,000. On
the 18 January 2021 the company announced that it had purchased
287,500 common shares at an aggregate cost of CAD$718,750.
Following these purchases, Westmount holds a total of 5,651,270
shares in JHI, representing approximately 7.2% of the issued common
shares in JHI as of 30 June 2021.
On the 17 November 2020 Westmount sold 1,200,000 shares in Ratio
Petroleum for an aggregate consideration of ILS 1,514,681
(GBP338,480 after costs). On the same date the company sold 300,000
WL2 Warrants for an aggregate consideration of ILS 69,251
(GBP15,282 after costs). A residual holding of 89,653 WL2 warrants
were exercised on the 14 January 2021 for an aggregate
consideration of ILS 116,280 (GBP27,378). After rebalancing and the
WL2 warrants exercise, Westmount continues to hold 89,653 shares in
Ratio Petroleum representing approximately 0.04% of the issued
share capital.
Westmount continues to hold a total of 567,185 common shares in
CEC, representing approximately 5.3% of the issued share capital of
CEC as of 10 August 2020.
Westmount continues to hold 1,500,000 shares in EOG,
representing approximately 0.75% of the common shares in issue as
of 6 September 2021.
On the 1 April 2021 the company announced that final repayment
had been made with respect to the 10% p.a. convertible unsecured
loan notes 2021 ("Convertible Loan Notes"), due on 31 March 2021.
The final repayment was a total of GBP456,548 cash, consisting of
GBP400,000 residual principal of Convertible Loan Notes plus
GBP56,548 in accrued interest. This transaction completed the
repayment in full of all Convertible Loan Notes issued on the 23
October 2018 and the company is now debt free.
The reported financial loss for the period is primarily made up
of a non-cash loss on financial assets held at fair value through
the profit and loss, some of which is as a result of Foreign
Exchange movements on the portfolio Investments when valued at the
period end.
US OTCQB Cross Trading Facility
On 1 December, 2020 we announced that the company's ordinary
shares of no par value each ("Ordinary Shares") commenced
cross-trading on the "OTCQB Market" in New York, U.S., under the
ticker symbol "WMELF".
The cross-trading facility on the OTCQB Market will allow
Westmount's Ordinary Shares to be traded in US Dollars by
broker-dealers in the United States. Westmount's Ordinary Shares
continue to trade on the AIM market of the London Stock Exchange
with the ticker symbol "WTE".
Summary/Outlook
The green shoots of economic recovery that were in evidence in
the second half of 2020 have continued to sprout in 2021.
Vaccination programs and improving management strategies are
pointing towards light at the end of the pandemic tunnel.
Increasing economic activity, population mobility and oil demand,
combined with OPEC+ supply discipline, has driven a sustained oil
price rally over the past 12 months with Brent crude trading
consistently above US$80/bbl since the start of October 2021. While
the clean energy transition has also gained momentum during this
period, the redirected capital flows and poor regional performance
of some renewable sources (wind and hydro) during summer 2021 have
had some unintended consequences - such as gas shortages in Europe
and Asia boosting demand for crude - while adding significantly, at
least in the near term, to gas and oil pricing pressures.
Drilling activity in the Guyana-Suriname basin continues to
accelerate driven by the industry's focus on 'advantaged barrels'
as a result of the unique combination of prospect sizes, reservoir
quality, low carbon intensity and low breakeven metrics
(US$25/bbl-US$35/bbl) that are available offshore Guyana. While the
initial drilling outcomes from the Westmount portfolio have yet to
deliver a standalone commercial discovery, the results to date
provide encouragement and must be viewed in the context of initial
'large step-out' wells evaluating giant stratigraphic prospects
while seeking to establish the perimeter of the multiple play
fairways both to the northeast and southwest of the prolific
Stabroek block. We are also heartened by the industry's continuing
appetite for exploration acreage in the Guyana-Suriname basin -
such as the Hess 5% farm-in on the Kaieteur Block (post Tanager-1)
and the award of 3 blocks in the Surinamese Shallow Offshore Bid
Round 2020/21 to Chevron (Block 5) and TotalEnergies + Qatar
Petroleum (Blocks 6 and 8). Furthermore, the applications for
environmental authorisation submitted to the Guyanese EPA by
ExxonMobil the operator of the Canje and Kaieteur blocks augurs
well for potentially extensive new drilling programs on these
blocks from 2022.
Westmount's strategy remains one of offering shareholders
exposure to high impact drilling outcomes in the Guyana-Suriname
Basin via material indirect holdings in some key licences. In this
context, and in spite of the access challenges, your Board remains
focused on investment opportunities and deployment of capital that
gives additional exposure to drilling in this prolific emerging
basin. In addition, subject to future drilling outcomes, there are
likely to be some consolidation opportunities within the basin
amongst the junior players, as exploration matures and in response
to risk management demands of investor capital. For the moment
Westmount remains the only US OTCQB and London AIM listed junior
player offering exposure to drilling outcomes across 3 blocks
offshore Guyana. We travel in hope.
GERARD WALSH
Chairman
28 October 2021
Notes
(1) At time of going to press results of the Sapote-1 well are
pending
(2) CPR by Netherland, Sewell & Associates Inc. ("NSAI")
dated 14 February 2021- published by Ratio Petroleum
(3) Hess Corporation Presentation, 9 September 2021
(4) Hess Corporation Q2 2021 Earnings Conference Call
remarks
(5) Westwood Global Energy Group
(6) ExxonMobil 2021 Investor Day Presentation
(7)
https://oilnow.gy/featured/guyana-has-3rd-highest-crude-oil-reserves-in-latin-america-caribbean-region/
(8) ExxonMobil Corporation press release, 7 October 2021
(9) JHI's Website https://www.jhiassociates.com
(10) Based on JHI's issued share capital inferred from JHI
transaction dated 28 June 2021
For further information, please contact:
Westmount Energy Limited www.westmountenergy.com
David King, Director Tel: +44 (0) 1534 823059
Anita Weaver
Cenkos Securities plc ( Nomad and Broker) Tel: +44 (0) 20 7397 8900
Nicholas Wells/Peter Lynch (Corporate Finance)
DIRECTORS' REPORT FOR THE YEARED 30 JUNE 2021
The Directors present their annual report and the audited
financial statements of Westmount Energy Limited (the "Company")
for the year ended 30 June 2021.
PRINCIPAL ACTIVITIES
The principal activity of the Company is, and continues to be,
an energy investment company. Development of the Company's
activities and its prospects are reviewed in the Chairman's Review
on pages 3 to 8.
The Company was incorporated in Jersey on 1 October 1992 under
the Companies (Jersey) Law 1991, as amended, and is a public
company with registered number 53623. The Company is listed on the
London Stock Exchange Alternative Investment Market ("AIM"). On 1
December 2020 the Company commenced cross-trading on the OTCQB
Market in New York, U.S., under the ticker symbol "WMELF".
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the
date of this report were as follows:
Shares held at Options held
at
30 June 2021 30 June 2021
G Walsh (Chairman) 11,933,565 1,000,000
D R King - 500,000
T P O'Gorman 4,650,000 750,000
D Corcoran 5,250,000 1,750,000
RESULTS AND DIVIDS
The result for the year is set out on page 19 in the Statement
of Comprehensive Income. The Directors do not recommend the payment
of a dividend in respect of these financial statements (2020:
GBPNil).
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman , age 58, a Swiss resident, is a member
of the Chartered Institute of Management Accountants and has been
involved in financing oil and gas companies for over 20 years. Mr
Walsh maintains his knowledge and skills via direct contact with
senior industry investors and other operators, and via monitoring
of significant market activities within the global energy
sector.
David R King , age 63, a Jersey resident, is a Fellow of the
Institute of Chartered Accountants in England and Wales and has
over 25 years' experience in capital markets and cross border
structuring gained from senior positions in a number of offshore
jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg
and Jersey. He is an experienced professional Non-Executive
Director and is regulated personally by the Jersey Financial
Services Commission. He maintains his knowledge and skills via
fulfilment of regular continuing professional development
obligations and by close monitoring of significant market
activities within the sector. Mr King acts as an independent
director and oversees the efficient operation of Company
Secretarial, Registrar and Administrative operations of the
Company.
Thomas P O'Gorman , age 69, a Northern Ireland resident, is a
long term investor in the resource sector and is the former
Chairman of Cove Energy Plc (formerly Lapp Platts Plc) who has been
involved in financing oil and gas companies for over 40 years. Mr
O'Gorman maintains his knowledge and skills via direct contact with
senior industry investors and other operators, and via monitoring
of significant market activities within the global energy
sector.
Dermot Corcoran , age 62, a Republic of Ireland resident, is a
petroleum geologist and geophysicist, with more than 30 years'
experience working with both major and minor hydrocarbon
exploration companies globally. Mr Corcoran has wide experience in
technical and commercial aspects of petroleum exploration and
production, gained from employment and investment experience in
Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and
the USA. Mr Corcoran maintains his knowledge and skills via direct
contact with senior industry investors and other operators,
attendance and engagement at industry conferences and seminars and
via monitoring of significant market activities within the global
energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate
Services Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey)
Limited, has indicated its willingness to continue in office, and a
resolution that it is re-appointed will be proposed at the next
annual general meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Jersey Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRS) and applicable law. Under Company law the
Directors must prepare financial statements that give a true and
fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period. In preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether the financial statements have been prepared in
accordance with IFRS as adopted by the European Union; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit
information of which the Company's auditor is unaware and each
Director has taken all the steps that he ought to have undertaken
as a director in order to make himself aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. The Company's website is maintained in
compliance with AIM Rule 26 and the applicable OTCQB Market
standards.
Legislation in Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
The Directors confirm that they have complied with all of the
above requirements in preparing these financial statements.
On behalf of the Board
D R KING
Director
28 October 2021
CORPORATE GOVERNANCE
The Board have adopted the Quoted Companies Alliance Corporate
Governance Code ("the QCA Code") following the London Stock
Exchange's requirement for AIM listed companies to adopt and comply
with a recognised corporate governance code.
Strategy and Business Model
The strategy of the Company is to invest in and provide follow
on capital to small and medium sized companies which have
significant growth possibilities operating in the oil and gas
sector. Members of the Board have specialist knowledge and
experience in the upstream sector of the oil and gas industry
(gained from extensive investing activity over a number of decades)
allowing them to identify projects and growth companies with
potentially higher returns, commensurate with acceptable levels of
risk. The Company undertakes extensive due diligence on potential
investment opportunities and monitors performance of its
investments via close contact with the companies concerned and
analysis of their public announcements and presentations. In common
with other investment companies in this sector, access as a
minority shareholder to projects and valuable investments is
challenging but the Board is confident of its ability to continue
to source attractive investment opportunities given close
relationships with a number of companies and their management
teams, and recognition of the Board's experience and strong
network.
Shareholder Relations
The Company engages closely with its principal shareholders, a
number of whom are Directors of the Company, primarily via
face-to-face meetings and publishes announcements of significant
activity consistent with market requirements. Shareholders receive
annual and half-year financial statements and are invited to the
Company's Annual General Meeting. Contact details for the Company
are maintained on the website and on Regulatory News Service
announcements. The Board seeks to build strong relationships with
its institutional shareholders which are managed by the Chairman
and supported by other members of the Board.
Gerard Walsh, Chairman, and Dermot Corcoran, Director, are
primarily responsible for shareholder liaison, and can be contacted
via the Contact Page on the Company's website.
Stakeholder and Social Responsibilities
The Board has identified its key stakeholders as being its
shareholders and investee companies, given it has no employees and
a small range of contracted service providers. It maintains contact
with shareholders, of whom a significant proportion are Directors,
via Regulatory News Service and periodic feedback from these
parties. Contact with investee companies is operated via the
Chairman and individual Board directors responsible for the
relevant investment recommendation, and is geared to key
operational, project and transactional cycles identified for the
company concerned.
Risk Management
The Company actively monitors and manages risk in its
activities, principally through oversight and operation of its
investment portfolio. The Company identifies key risks in all of
its investments during the selection and due diligence cycle, and
subsequent recommendations for investment by the Company consider
for each proposal a range of risks and mitigating factors.
Identification of these risks is achieved by direct engagement with
the companies in which Westmount seeks to invest, close analysis of
their market opportunities and threats, combined with detailed
knowledge of the market sector where they operate and their
competitors.
Board Composition, Evaluation and Decision Making
The Board comprises three shareholder Directors (including the
Chairman Gerard Walsh) and one Non-Executive Director (David King)
resident in Jersey, who is considered to be independent.
The Company deviates from the requirements of the QCA Code in
that it has only one independent non-executive director. The
Directors consider that the structure of the Board is appropriate
and proportionate for the business at this stage of the Company's
growth, and that the Independent Director, in conjunction with the
Company's Nominated Adviser, provides appropriate challenge to the
executive directors on all corporate governance matters. The Board
intends to keep all aspects of its corporate governance -
independence and the balance of executive and non-executive roles
in particular - under review going forward.
Each of the four directors has considerable experience in their
respective fields and act collectively in all decision making of
the Company. The Board is satisfied that it has a suitable balance
between independence on the one hand and knowledge of the Company's
activities, to allow it to properly discharge its responsibilities
and duties. Directors are expected to use their judgement and
experience to challenge and assess the appropriateness of
operations and decision making at all times.
The Board has met 5 times this financial year and Directors each
dedicate between 12 and 150 daystime to the Company per annum.
The Board regularly takes advice from its Nominated Advisor,
Cenkos Securities plc, and other external advisors (principally its
external lawyers) in relation to periodic investment opportunities
and fund raising.
The Board completes an annual self-evaluation of its performance
based on externally determined guidelines appropriate to the
composition of the Board and the Company's operation, including
Board Sub Committees. The scope of the self-evaluation exercise
will be re-assessed each year to ensure appropriate depth and
coverage of the Board's activities consistent with corporate best
practice. The Board has adopted a board effectiveness
questionnaire, which assesses the composition, processes,
behaviours and activities of the board through a range of criteria,
including board size and independence, mix of skills and
experience, and general corporate governance considerations in line
with the QCA code.
Given the stage of the business' maturity, the responsibilities
of a nomination committee are delegated to the Board, and there are
no formal succession planning processes in place. The Board intends
to keep this under review as the business develops.
Corporate Culture
Westmount Energy supports the growing awareness of social,
environmental and ethical matters when considering business
practices. These statements provide an outline of the policies in
place that guide the Company and its employees when dealing with
social, environmental and ethical matters in the workplace.
Code of Conduct
Westmount Energy maintains and requires the highest ethical
standards in carrying out its business activities in regards to
dealing with gifts, hospitality, corruption, fraud, the use of
inside information and whistle-blowing.
Westmount Energy maintains a zero-tolerance policy towards
bribery and corruption.
Equal Opportunity and Diversity
Westmount Energy promotes and supports the rights and
opportunities of all people to seek, obtain and hold employment
without discrimination.
It is our policy to make every effort to provide a working
environment free from bullying, harassment, intimidation and
discrimination on the basis of disability, nationality, race, sex,
sexual orientation, religion or belief.
Joint Venture Partners, Contractors and Suppliers
Westmount Energy is committed to being honest and fair in all
its dealings with partners, contractors and suppliers.
Procedures are in place to ensure that any form of bribery or
improper behaviour is prevented from being conducted on Westmount
Energy's behalf by joint venture partners, contractors and
suppliers. Westmount Energy also closely guards information
entrusted to it by joint venture partners, contractors and
suppliers, and seeks to ensure that it is never used
improperly.
Operating Responsibility and Continuous Improvement
Westmount Energy adopts an environmental policy which sets
standards that meet or exceed industry guidelines and host
government regulations. This is reviewed on a regular basis.
Wherever we operate we will develop, implement and maintain
management systems for sustainable development that will strive for
continual improvement.
Westmount Energy is committed to maintaining and regularly
reviewing its Health and Safety and Environmental Policies.
Periodic feedback from stakeholders, as described in relation to
Stakeholder and Social Responsibilities (above), allows the Board
to monitor the culture of the Company, as well as its ethical
values and behaviours.
Governance Structures
The Board operates to manage and direct the affairs of the
Company via close contact between Board members and through both
regular scheduled and ad-hoc Board meetings. The Board aims to meet
at least quarterly with a timetable set by the external Company
Secretary with formal agendas and papers delivered in advance
supporting key matters for consideration or approval. Additionally,
contact is maintained between the directors via email and telephone
given the geographic separation of the Board.
Mr Walsh as Chairman is responsible for setting the strategy of
the Company and maintaining performance of the Board in line with
the broad objectives set in that strategy. He is responsible for
liaison with key stakeholders, including shareholders and
prospective investee companies, and also with advisers and
regulatory authorities.
Mr King, as a Jersey resident, maintains close contact with the
Company Secretary and other contracted service providers from
Jersey. The Board does not operate separate sub-committees (Audit,
Remuneration or Nomination) given its small size and close contact
for key decisions. The Company does not plan to establish new
sub-committees for the foreseeable future.
The Board retains full authority for the Company such that all
decisions on behalf of the Company are reserved for the Board.
Communication with Stakeholders
The Company communicates with shareholders through the Annual
Report and Audited Financial Statements, annual and half year
results announcements, the Annual General Meeting, and periodic
meetings with significant institutional shareholders and
analysts.
Corporate information (including all Company publications and
announcements) is available to all shareholders, prospective
investors and the public and is maintained on the Company's
website, www.westmountenergy.com .
In the last 12 months there were no votes of shareholders where
a significant proportion voted against a resolution.
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF WESTMOUNT
ENERGY LIMITED
Opinion
We have audited the financial statements of Westmount Energy
Limited (the 'Company') as at and for the year ended 30 June 2021
which comprise the Statement of Comprehensive Income, the Statement
of Financial Position, Statement of Changes in Equity, the
Statement of Cash Flows and the notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is International Financial Reporting Standards
('IFRSs') as adopted by the European Union and the requirements of
the Companies (Jersey) Law 1991.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 June 2021 and of its loss for the year then
ended;
-- have been properly prepared in accordance with the IFRSs as
adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report.
We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in Jersey, including the Financial Reporting Council's
Ethical Standard, and we have fulfilled our ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the Company's
ability to continue to adopt the going concern basis of accounting
included understanding the nature of the Company, its business
model, system of internal control and related risks including
relevant impact of the COVID-19 pandemic to the business, reviewing
the performance of the underlying investments, critically assessing
the key assumptions made by management including its
appropriateness in the context of the financial reporting
framework, and evaluating the directors' plans for future actions
in relation to their assessment.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Emphasis of matter
We draw your attention to note 8 and note 15 of the financial
statements, which include unlisted investments held by the Company
and carried at GBP13,989,918 (2020: GBP10,943,867) based on
Directors' valuations. These are Level III investments and have
been valued based on the recent sales price of the investments
and/or using relevant market proxies where available. The Directors
have also considered market expectations of future performance of
the entity's industry sector, in particular known interest in the
area of current exploration, in arriving at their valuations. Our
audit opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
-- Valuation of Investments. The valuation of the Company's
investments is a key driver of the Company's investment return and
investments represent a material proportion of the Company's
financial assets. The relevant accounting policies and investment
composition are discussed in note 2 and note 8, respectively, to
the financial statements.
The investments represent listed and unlisted equity instruments
amounting to GBP0.47 million and
GBP13.99 million, respectively, as at 30 June 2021. The
identified risk predominantly relates to the unquoted investment
which valuation carries a greater degree of judgement by the
directors and has been valued based upon the price of recent
investments which is a valuation basis included in the
International Private Equity and Venture Capital Guidelines (IPEVC
Guidelines).
Our main audit procedures to address the identified risk in
respect of the unlisted investment were (a) we discussed with
management their unlisted valuation methodology, and assessed the
recognition and measurement of the unlisted investment held for
compliance with IFRSs, and whether it had been accounted for in
accordance with the stated accounting policy and with IPEVC
Guidelines; and (b) we substantiated the nature and background of
recent transactions which had been used as the basis of the
valuation. We have not identified any material issues from the
completion of the above procedures.
-- Risk of management override of controls. In accordance with
ISAs (UK), we are required to consider the risk of management
override of internal controls. Due to the unpredictable nature of
this risk, we are required to assess it as a significant risk
requiring special audit consideration.
Our audit work included, but was not restricted to, specific
procedures relating to the risk that are required by ISA (UK) 240,
The Auditor's Responsibilities Relating to Fraud in an Audit of
Financial Statements, which includes the testing of journal
entries, evaluation of judgements and assumptions in management's
estimate, and test of significant transactions outside the normal
course of business. We have not identified any material issues from
the completion of the above procedures.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatement we define materiality as the level of misstatement
that would probably influence the economic decisions of a
reasonably knowledgeable person.
We have used approximately 2% of gross assets rounded down, or
GBP313,000 (2020: GBP270,000) which reflects the fact that this is
an investment fund where its market value is determined
predominantly by its gross asset value.
An overview of the scope of our audit
During our audit planning, we determined materiality and
assessed the risks of material misstatement in the financial
statements including the consideration of where directors made
subjective judgements, for example, in respect of the assumptions
that underlie significant accounting estimates and their assessment
of future events that are inherently uncertain. We tailored the
scope of our audit in order to perform sufficient work to enable us
to provide an opinion on the financial statements as a whole taking
into account the Company, its accounting processes and controls and
the industry in which it operates.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the chairman's review or
the directors' report.
We have nothing to report in respect of the following matters
where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or
-- returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities with regard to the financial statements set out on
page 9, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
The objectives of our audit in respect of fraud, are to identify
and assess the risks of material misstatement of the financial
statements due to fraud; to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement due
to fraud, through designing and implementing appropriate responses
to those assessed risks; and to respond appropriately to instances
of fraud or suspected fraud identified during the audit. However,
the primary responsibility for the prevention and detection of
fraud rests with both management and those charged with governance
of the Company.
Our approach was as follows:
-- We obtained an understanding of the legal and regulatory
requirements applicable to the Company and considered that the most
significant but not limited to the Companies (Jersey) Law 1991. We
also reviewed the laws and regulations applicable to the Company
that has indirect impact to the financial statements.
-- We obtained an understanding of how the Company complies with
these requirements by discussions with management and those charged
with governance.
-- We assessed the risk of material misstatement of the
financial statements, including the risk of material misstatement
due to fraud and how it might occur, by holding discussions with
management and those charged with governance.
-- We inquired of management and those charged with governance
as to any known instances of non-compliance or suspected
non-compliance with laws and regulations.
-- We reviewed the compliance reports and minutes of the meeting
to see whether there is non-compliance reported to management and
those charged with governance.
-- Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws
and regulations. This included making enquiries of management and
those charged with governance and obtaining additional
corroborative evidence as required.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's shareholders as a
body, in accordance with Article 113A of the Companies (Jersey) Law
1991. Our audit work has been undertaken so that we might state to
the Company's shareholders those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
shareholders as a body, for our audit work, for this report, or for
the opinions we have formed.
Jeff Vincent
For and on behalf of Moore Stephens Audit & Assurance
(Jersey) Limited
1 Waverley Place
Union Street
St Helier Jersey
Channel Islands JE4 8SG
28 October 2021
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2021
Year ended Year ended
30 June 30 June
2021 2020
Notes GBP GBP
Net fair value (losses)/gains on
financial assets held at fair value
through profit or loss 8 (692,288) 201,252
Net fair value gains on financial
liabilities held at fair value through
profit or loss 11
Impairment of intangible assets 103,205 75,419
Finance costs 6 - (33,333)
Administrative expenses 7 (33,702) (54,575)
4 (267,397) (319,297)
Foreign exchange (losses)/gains (100,160) 17,988
Share options (expense)/credit 14 (25,877) 1,053
Operating loss (1,016,219) (111,493)
Loss before tax (1,016,219) (111,493)
Tax 3 - -
Loss after tax (1,016,219) (111,493)
Other comprehensive income - -
-------------- ----------------
Total comprehensive loss for the
year (1,016,219) (111,493)
============== ================
Basic earnings per share (pence)
continuing and total operations 5 (0.72) (0.11)
-------------- ----------------
Diluted earnings per share (pence)
continuing and total operations 5 (0.69) (0.11)
-------------- ----------------
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
As at As at
30 June 30 June
2021 2020
Notes GBP GBP
ASSETS
Non-current assets
Financial assets held at fair value
through profit or loss 8 14,465,631 12,079,736
------------ -----------
14,465,631 12,079,736
------------ -----------
Current assets
Other receivables and prepayments 9 4,441 -
Cash and cash equivalents 10 1,218,922 2,435,664
------------ -----------
1,223,363 2,435,664
------------ -----------
Total assets 15,688,994 14,515,400
============ ===========
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 12 39,534 46,406
Derivative financial instruments 11 - 133,333
Borrowings 11 - 392,718
------------ -----------
39,534 572,457
------------ -----------
Total Liabilities 39,534 572,457
------------ -----------
EQUITY
Stated capital 13 16,652,482 13,955,623
Share based payment reserve 14 469,670 443,793
Retained earnings (1,472,692) (456,473)
------------ -----------
Total equity 15,649,460 13,942,943
------------ -----------
Total liabilities and equity 15,688,994 14,515,400
============ ===========
These financial statements were approved and authorised for issue
by the Board of Directors on 28 October 2021 and were signed on
its behalf by:
D R King
Director
28 October 2021
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2021
Stated Share-based Retained Total
Notes capital payment reserve earnings equity
GBP GBP GBP GBP
As at 1 July 2019 5,829,872 444,846 (344,980) 5,929,738
Comprehensive income
Total Comprehensive
loss for the year ended
30 June 2020 - - (111,493) (111,493)
Share issue 13 8,125,751 - - 8,125,751
Transactions with owners
Share options credit 14 - (1,053) - (1,053)
As at 30 June 2020 13,955,623 443,793 (456,473) 13,942,943
----------- ---------------- ------------ ------------
Comprehensive income
Total Comprehensive
loss for the year ended
30 June 2021 - - (1,016,219) (1,016,219)
Share issue 13 2,696,859 - - 2,696,859
Transactions with owners
Share options expense 14 - 25,877 - 25,877
As at 30 June 2021 16,652,482 469,670 (1,472,692) 15,649,460
----------- ---------------- ------------ ------------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2021
Year ended Year ended
30 June 30 June
2021 2020
Notes GBP GBP
Cash flows from operating activities
Loss for the year (1,016,219) (111,493)
Adjustments for:
Net loss/(gain) on financial assets
at fair value through profit or loss 692,288 (201,252)
Net gain on financial liabilities
at fair value through profit or loss (103,205) (75,419)
Impairment of intangible assets 6 - 33,333
Interest on borrowings 33,702 54,575
Share options expense/(credit) 14 25,877 (1,053)
Movement in other receivables and
prepayments (4,441) 7,001
Movement in trade and other payables (6,874) 984
Proceeds from sale of investments 8 356,011 -
8,
Purchase of investments 13 (737,334) (5,132,689)
------------ ------------
Net cash used in operating activities (760,194) (5,426,013)
------------ ------------
Cash flows from financing activities
Repayment of convertible loan notes 11 (456,548) -
Proceeds from issue of ordinary shares 13 - 7,798,303
Net cash generated from financing
activities (456,548) 7,798,303
Net (decrease)/increase in cash and
cash equivalents (1,216,742) 2,372,290
------------ ------------
Cash and cash equivalents at beginning
of year 2,435,664 63,374
Cash and cash equivalents at end
of year 10 1,218,922 2,435,664
------------ ------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE
EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an
energy investment company. The investment strategy of the Company
is to invest in and provide follow on capital to small and medium
sized companies that have significant growth possibilities.
The Company was incorporated in Jersey on 1 October 1992 under
the Companies (Jersey) Law 1991, as amended, and is a public
company with registered number 53623. The Company is listed on the
London Stock Exchange Alternative Investment Market ("AIM"). On 1
December 2020 the Company commenced cross-trading on the OTCQB
Market in New York, U.S., under the ticker symbol "WMELF".
Basis of Preparation
The financial statements are prepared on a going concern basis
in accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS") and applicable legal and
regulatory requirements of the Companies (Jersey) Law 1991. The
financial statements have been prepared under the historical cost
convention as modified by the valuation of financial assets held at
fair value through profit or loss.
The financial statements have been prepared on a going-concern
basis as, in the opinion of the Directors, the Company has adequate
resources to continue for the foreseeable future.
COVID-19
The Directors acknowledge the continued outbreak of Coronavirus
("COVID-19") and its potentially adverse economic impact. The
Directors consider that at this stage the Company is not
experiencing any major disruption to its business model from
COVID-19 nor its effect on the oil and capital markets. The
Directors will continue however, to closely monitor the ongoing
impact of COVID-19 on the Company's operations.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in
the preparation of these financial statements are summarised below.
These accounting policies have been used throughout all periods
presented in the financial statements.
New standards, amendments and interpretations to existing
standards that are effective in the current year
There are no new standards or amendments to standards that have
been applied for the first time for the reporting period commencing
1 July 2020.
New standards, amendments and interpretations to existing
standards that are not yet effective and have not been adopted
early by the Company
At the date of authorisation of these financial statements there
are no other standards that are not yet effective and that would be
expected to have a material impact on the Company in the current or
future reporting periods and on foreseeable future
transactions.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and the exercise of
judgement by management while applying the Company's accounting
policies in relation to the impairment of intangible assets, value
of options issued and derivative financial instruments, as set out
in notes 6, 11, 14 and 15. Derivative financial instruments, which
are embedded in the convertible loan notes issued by the Company,
have been presented separately from the host contract. The
bifurcation of the embedded derivative financial instruments
requires judgement by management to estimate the fair value of the
derivatives on initial recognition of the financial instrument. The
valuation and subsequent impairment reviews of the Company's
intangible assets requires the use of accounting estimates and
judgement by the management.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
2. ACCOUNTING POLICIES (continued)
Use of estimates and judgements (continued)
These estimates are based on the management's best knowledge of
the events which existed at the date of issue of the financial
statements and at the statement of financial position date however,
the actual results may differ from these estimates
Financial assets at fair value through profit and loss that are
not listed have been valued in accordance with IFRS using the
International Private Equity and Venture Capital ("IPEVC")
Guidelines and information received from the investment entity. The
inputs to value these assets require significant estimates and
judgements to be made by the Directors. The Directors have
considered the sensitivity of the valuations as detailed in note
15.
Functional and presentation currency
The functional currency of the Company is United Kingdom Pounds
Sterling ("Sterling"), the currency of the primary economic
environment in which the Company operates. The presentation
currency of the Company for accounting purposes is also
Sterling.
Foreign currency monetary assets and liabilities are translated
into Sterling at the rate of exchange ruling on the last day of the
Company's financial year. Foreign currency non-monetary items that
are measured at fair value in a foreign currency are translated
into Sterling using the exchange rates at the date when the fair
value was determined. Foreign currency transactions are translated
at the exchange rate ruling on the date of the transaction. Gains
and losses arising on the currency translation are included in
administrative expenses in the Statement of Comprehensive Income in
the year in which they arise.
Financial instruments
Financial assets and financial liabilities are recognised when
the Company becomes party to the contractual provisions of the
instrument.
(a) Classification
The Company classifies its financial assets in the following
measurement categories:
- those to be measured subsequently at fair value (either
through other comprehensive income or through profit or loss);
and
- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows. The Company determines the classification of its financial
assets and financial liabilities at initial recognition.
Financial liabilities which are not financial liabilities held
at fair value through profit or loss are classified as other
financial liabilities and held at amortised cost.
(b) Recognition and measurement
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in the statement of comprehensive
income.
Subsequent to initial recognition, financial assets at fair
value through profit or loss are re-measured at fair value. For
listed investments, fair value is determined by reference to stock
exchange quoted market bid prices at the close of business at the
end of the reporting year, without deduction for transaction costs
necessary to realise the asset. For non-listed investments fair
value is determined by using recognised valuation methodologies, in
accordance with the IPEVC Guidelines. Gains or losses arising from
changes in the fair value of financial assets at fair value through
profit or loss are presented in the statement of comprehensive
income in the period in which they arise.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
2. ACCOUNTING POLICIES (continued)
(b) Recognition and measurement (continued)
Subsequent measurement of the Company's debt instruments depends
on the model for managing the asset and the cash flow
characteristics of the asset.
The Company measures debt instruments at amortised cost if they
are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are
measured at amortised cost. The Company recognises any impairment
loss on initial recognition and any subsequent movement in the
impairment provision in the statement of comprehensive income.
Debt instruments which do not represent solely payments of
principal and interest are measured at fair value through profit or
loss.
Financial liabilities, which includes borrowings, are measured
at amortised cost using the effective interest method. The
effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the
financial liability or, where appropriate, a shorter period, to the
net carrying amount on initial recognition.
Financial liabilities at fair value through profit or loss are
re-measured at fair value. The fair value of the derivative
financial instruments is determined by reference to stock exchange
quoted market bid prices at the close of business at the end of the
reporting year, without deduction for transaction costs incurred by
the Company on realisation of the liability, see note 11. Gains or
losses arising from changes in fair value of financial liabilities
at fair value through profit or loss are presented in the statement
of comprehensive income in the period in which they arise.
(c) Impairment
Under IFRS 9, the impairment model requires the recognition of
impairment provisions based on expected credit losses ("ECL")
rather than only incurred credit losses as was the case under IAS
39. IFRS 9 permits a simplified approach to trade and other
receivables which allows the Company to recognise the loss
allowance at initial recognition and throughout its life at an
amount equal to lifetime ECL. ECL are a probability-weighted
estimate of credit losses. A credit loss is the difference between
the cash flows that are due to an entity in accordance with the
contract and the cash flows that the entity expects to receive
discounted at the original effective interest rate. ECL consider
the amount and timing of payments, thus a credit loss arises even
if the entity expects to be paid in full but later than when
contractually due.
The historical default rate has been considered by the Directors
and there is no history of bad debt. Under IFRS 9 ECL Model as
well, which is forward looking, all factors that could contribute
to expected future losses have been considered by the Directors and
there is no expectation of credit loss in the future. As such the
Directors concluded that there is no material impact on the
financial statements.
(d) Derecognition
A financial asset or part of a financial asset is derecognised
when the rights to receive cash flows from the asset have expired
and substantially all risks and rewards of the asset have been
transferred.
The Company derecognises a financial liability when the
obligation under the liability is discharged, cancelled or
expired.
Intangible assets
Separately acquired Net Profit Interest licences ("NPI
licences") are classified as intangible assets and are shown at
historical cost. Such NPI licences, which are not subject to
amortisation, allow the Company to benefit from exploration and
extraction of energy resources, if successful, from investee
companies granting such NPI licences.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
2. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
The value of the NPI licences are assessed periodically for
possible impairment when events indicate that the fair value of the
intangible asset may be below the Company's carrying value. When
such a condition is deemed to be other than temporary, the carrying
value of the investment is written down to its fair value, and the
amount of the write-down is included in net profit or loss on
financial assets held at fair value through profit or loss. In
making the determination as to whether a decline is other than
temporary, the Company considers such factors as the duration and
extent of the decline, the investee company's financial
performance, and the Company's ability and intention to retain its
investment for a period that will be sufficient to allow for any
anticipated recovery in the NPI licences' market value.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on
call with banks and cash with broker. For the purpose of the
Statement of Cash Flows, cash and cash equivalents are considered
to be all highly liquid investments with maturity of three months
or less at inception.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Transaction costs
associated with the issuing of shares are deducted from stated
capital. Retained earnings include all current and prior period
retained profits. Shares are classified as equity when there is no
obligation to transfer cash or other assets.
Expenditure
The expenses of the Company are recognised on an accruals basis
in the Statement of Comprehensive Income.
Share options
Equity-settled share-based payment transactions are measured at
the fair value of the goods and services received unless that
cannot be reliably estimated, in which case they are measured at
the fair value of the equity instruments granted. Fair value is
measured at the grant date and is estimated using valuation
techniques as set out in note 14. The fair value is recognised in
the Statement of Comprehensive Income, with a corresponding
increase in equity via the share option account. When options are
exercised, the relevant amount in the share option account is
transferred to stated capital.
3. TAXATION
The Company is subject to income tax at a rate of 0%. The
Company is registered as an International Services Entity under the
Goods and Services Tax (Jersey) Law 2007 and a fee of GBP300 has
been paid, which has been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES
2021 2020
GBP GBP
Administration and consultancy fees 57,860 95,952
Advisory fees 41,240 25,550
Audit fees 15,500 17,500
Directors' fees 60,000 60,000
Legal and professional fees 37,194 44,357
Printing and stationery 4,564 11,101
Registered agent's fees 21,974 7,265
Other expenses 29,065 57,572
5. EARNINGS PER SHARE 267,397 319,297
-------- --------
Basic earnings per share (pence) (0.72) (0.11)
Diluted earnings per share (pence) (0.69) (0.11)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
5. EARNINGS PER SHARE (continued)
Current year loss
The calculation of diluted earnings per share is not required
this year as a loss for the year is not diluted. The calculations
have been left in for information.
The table below presents information on the profit attributable
to the shareholders and the weighted average number of shares used
in the calculating the basic and diluted earnings per share.
2021 2020
Basic earnings per share GBP GBP
Loss attributable to the shareholders
of the Company (1,016,219) (111,493)
Diluted earnings per share
(Loss)/profit attributable to the shareholders
of the Company:
Used in calculating basic earnings per
share (1,016,219) (111,493)
Add interest expense 33,702 54,575
Loss attributable to the shareholders
of the Company used in calculating diluted
earnings per share (982,517) (56,918)
-------------- --------------
No. of shares No. of shares
Weighted average number of ordinary shares
used as the denominator in calculating
basic earnings per share 140,364,390 103,708,120
Adjustments for calculating of diluted
earnings per share:
Share options 1,407,808 1,094,178
Convertible loan notes - 4,044,477
-------------- --------------
Weighted average number of ordinary shares
and potential ordinary shares used as
the denominator in calculating diluted
earnings per share 141,772,198 108,846,775
-------------- --------------
Share options
The share options have been included in the determination of the
diluted earnings per share to the extent to which they are
dilutive. The share options granted prior to 30 June 2020 are
considered to be dilutive, and will be included in the calculation
of diluted earnings per share, as the option price is below the
average share price.
750,000 share options were granted on 6 August 2020. These will
not be included in the calculation of diluted earnings per share
because they are antidilutive as at 30 June 2021. These potentially
dilute earnings per share in the future as these may not be
exercised before their expiration date.
Convertible loan notes
Conversion options over convertible loan notes are considered to
be potential ordinary shares and have been included in the
determination of comparative diluted earnings per share from their
date of issue. Interest accrued on the convertible loan notes,
which may be converted to ordinary shares, is also considered to be
dilutive and is included in the comparative diluted earnings per
share. On 31 March 2021 the loan notes were repaid in full along
with the accrued interest.
6. INTANGIBLE ASSETS
2021 2020
GBP GBP
At 1 July - 33,333
Acquisition - -
Impairment - (33,333)
------ ---------
At 30 June - -
------ ---------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
6. INTANGIBLE ASSETS (continued)
In the year ending 30 June 2019, the Company acquired Net Profit
Interest licences ("NPI") in three offshore UK blocks for GBP100,000.
The NPI licences allowed the Company to benefit from near term
exploration and appraisal drilling targets, with independent prospect
risks, if such exploration and drilling is successful. The NPI
licences required no additional investment from the Company. The
licences were initially recorded in the books of the Company at
cost. An impairment test was performed on an annual basis by the
Directors and these were subsequently measured at cost less any
adjustments for impairment losses. All of the licences were deemed
to be fully impaired by the Directors as at 30 June 2020, as the
underlying operating licences had been relinquished by the company
granting each NPI licence.
7. FINANCE COSTS
The Company previously issued 10% convertible loan notes as set
out in note 11. Interest was payable to each of the relevant Noteholders
on the principal amount of the Loan Note for the time being outstanding
at a rate calculated in accordance with the Instrument. The interest
payable at 10% per annum on the Loan Notes held by any Noteholder
can be converted into a corresponding number of new fully paid
Ordinary Shares at the Noteholder Conversion Price when certain
conditions within the Instrument are met.
As at 30 June 2020 GBP1.2 million of the principal had been repaid
early leaving a residual balance of GBP400,000 advanced at 30 June
2020. On 31 March 2021 the remaining principal of GBP400,000 was
repaid in full along with the accrued interest of GBP56,548.
The interest charge through the statement of comprehensive income
during the year was GBP33,702 (2020: GBP54,575).
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 2021 2020
GBP GBP
Equity investments
Argos Resources Ltd ("Argos") 27,300 24,800
Cataleya Energy Corporation ("Cataleya") 4,105,846 4,590,523
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 433,500 359,250
JHI Associates Inc ("JHI") 9,884,072 6,353,344
Ratio Petroleum Energy Limited Partnership
("Ratio") 14,913 643,446
Ratio Petroleum Energy Limited Partnership
Warrants
("Ratio Warrants") - 108,373
Total investments 14,465,631 12,079,736
----------- -----------
Net changes in fair value of financial assets designated at
fair value through profit or loss
2021 2020
GBP GBP
Opening cumulative unrealised gain 2,191,024 1,989,772
Net unrealised movement (586,666) 201,252
Cumulative unrealised gain on financial assets
at fair value through profit or loss 1,604,358 2,191,024
---------- ----------
2021 2020
GBP GBP
Unrealised (loss)/gain (586,666) 201,252
Realised loss on disposal of financial assets (105,622) -
Net changes in fair value of financial assets
at fair value through profit or loss (692,288) 201,252
---------- --------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)
On 30 June 2021, the fair value of the Company's holding of 1,000,000
(2020: 1,000,000) ordinary fully paid shares in Argos, representing
0.43% (2020: 0.45%) of the issued share capital of the company,
was GBP27,300 (2020: GBP24,800) (2.73p per share (2020: 2.48p per
share)). No shares were disposed of in the current or prior year.
On 30 June 2021, the fair value of the Company's holding of 1,500,000
(2020: 1,500,000) ordinary fully paid shares in Eco Atlantic, representing
0.75% (2020: 0.81%) of the issued share capital of the
company, was GBP433,500 (2020: GBP359,250) (28.90p per share (2020:
23.95p per share)). No shares were disposed of in the current year
(2020: nil).
On 30 June 2021, the fair value of the Company's holding of 89,653
(2020: 1,200,000) ordinary fully paid shares in Ratio, representing
0.04% (2020: 0.70%) of the issued share capital of the Company,
was GBP14,913 (2020: GBP643,446) (16.63p per share (2020: 53.62p
per share)). In November 2020 the Company disposed of all 1,200,000
shares in Ratio for a consideration of GBP338,481 (excluding transaction
costs) representing 28.20p per share. In January 2021, the 89,653
Ratio Warrants were exercised and converted into ordinary shares
for a consideration of GBP27,378.
In November 2020 the Company sold 300,000 of the Ratio Warrants
for a consideration of GBP15,282 (excluding transaction costs)
(5.10p per warrant). In January 2021, the Company exercised its
remaining Ratio Warrants (89,653) in exchange for Ratio ordinary
shares for a consideration of GBP27,378 (30.54p per warrant). In
the prior year the Company purchased 389,653 warrants in Ratio
for GBP209,489 (53.76p per warrant). The value of the warrants
at 30 June 2021 was nil (2020: GBP108,373 (27.81p per warrant).
On 30 June 2021, the Directors' estimate of the fair value of the
Company's holding of 567,185 (2020: 567,185) shares in Cataleya
was GBP4,105,846 (2020: GBP4,590,523) (GBP7.24 per share (2020:
GBP8.09)). No shares were purchased during the year (2020: 313,500
ordinary fully paid shares were purchased in Cataleya for GBP2,574,321
(GBP8.21 per share).
During the year the Company purchased 2,087,500 (2020: 1,350,000)
ordinary fully paid shares in JHI for a total consideration of
GBP3,411,939 (2020: GBP2,348,879) which includes a share issue
by the Company of 18,290,000 (2020: 15,930,000) new nil par value
ordinary shares as part consideration for JHI shares received during
the year (see note 13). On 30 June 2021, the Directors' estimate
of the fair value of the Company's holding in JHI was GBP9,884,072
(2020: GBP6,353,344), GBP1.75 per share (2020: GBP1.78 per share).
No shares were disposed of in the current or prior year.
9. OTHER RECEIVABLES AND PREPAYMENTS 2021 2020
GBP GBP
Prepayments 4,441 -
------ -----
10. CASH AND CASH EQUIVALENTS
2021 2020
GBP GBP
Cash at bank 681,066 2,223,801
Cash at broker 537,856 211,863
---------- ----------
1,218,922 2,435,664
---------- ----------
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS
The Company issued GBP1,600,000 10% convertible loan notes on 24
October 2018. The notes were convertible into ordinary shares of
the Company, at the option of the holder, or repayable on 31 March
2021. The conversion price was the higher of GBP0.08 per share
or a 25% discount on the volume weighted average price ("VWAP")
5 days prior to the repayment date.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
Interest accrued up to and payable on 31 October 2019 may be converted
into shares, at the option of the Company, at a conversion price
of a 10% discount of VWAP 5 days prior to the payment date. Interest
accrued up to and payable on 31 October 2020 may be converted into
shares, at the option of the holder, at a conversion price of the
higher of GBP0.08 per share or a 25% discount of VWAP 5 days prior
to the payment date. On 31 October 2019 both the 1st interest payment
due (GBP67,447) and the early repayment of GBP260,000 principal
of the residual GBP660,000 of 10% p.a. convertible unsecured loan
notes was made.
On 18 March 2019 the Company repaid GBP940,000 of the principal
of the convertible loan notes, the interest accrued on the repaid
portion of the convertible loan note was waived by the holder.
On 31 March 2021 the remaining principal of GBP400,000 was repaid
in full along with the accrued interest of GBP56,548.
Interest Principal Total
GBP GBP GBP
Face value of notes issued - 1,600,000 1,600,000
Value of conversion rights - (100,000) (100,000)
Issue costs - (49,395) (49,395)
- 1,450,605 1,450,605
--------- ------------ ------------
Repayment of convertible loan
notes - (1,087,954) (1,087,954)
Interest expense 100,815 - 100,815
Interest paid (70,748) - (70,748)
--------- ------------ ------------
Total borrowings at 30 June 2020 30,067 362,651 392,718
Repayment of convertible loan
notes - (400,000) (400,000)
Interest expense 33,702 - 33,702
Interest paid (56,548) - (56,548)
Movement in fair value on final
conversion (7,221) 37,349 30,128
--------- ---------- ----------
Total borrowings at 30 June 2021 - - -
--------- ---------- ----------
Interest Principal Total
GBP GBP GBP
Conversion rights measured at
fair value through profit or
loss
Opening balance at 1 July 2020 8,876 124,457 133,333
Initial recognition of conversion
rights from issue of convertible
loan notes - - -
Repayment of convertible loan
notes (cancellation of conversion
rights) - - -
Movement in fair value (8,876) (124,457) (133,333)
--------- ---------- ----------
Total derivative financial instruments
at 30 June 2021 - - -
--------- ---------- ----------
Conversion rights measured at
fair value through profit or
loss
Opening balance at 1 July 2019 3,592 221,411 225,003
Initial recognition of conversion
rights from issue of convertible
loan notes - - -
Repayment of convertible loan
notes (cancellation of conversion
rights) - - -
Movement in fair value 5,284 (96,954) (91,670)
------ --------- ---------
Total derivative financial instruments
at 30 June 2020 8,876 124,457 133,333
------ --------- ---------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
The initial fair value of the derivative portion of the convertible
loan notes was determined by the potential loss on ordinary shares
if converted on the date the convertible loan notes were issued.
The derivative financial instruments were recognised as a financial
liability measured at fair value through profit or loss. The remainder
of the proceeds was allocated to the liability which is subsequently
recognised on an amortised cost basis until extinguished on conversion
or maturity of the convertible loan notes.
12. TRADE AND OTHER PAYABLES 2021 2020
GBP GBP
Accrued expenses 39,534 46,406
------- -------
13. STATED CAPITAL
Allotted, called up and fully paid: Ordinary shares Ordinary shares
No. GBP
1 July 2019 64,766,745 5,829,872
Additions 60,994,741 8,125,751
---------------- ----------------
1 July 2020 125,761,486 13,955,623
Additions 18,290,000 2,696,859
---------------- ----------------
At 30 June 2021 144,051,486 16,652,482
---------------- ----------------
On 9 September 2020, in accordance with the terms of the JHI share
purchase agreements, the Company issued a total of 8,850,000 new
nil par value ordinary shares for 750,000 JHI shares. This represented
a non-cash transaction. The total valuation of the Company's share
issue was GBP1,304,933.
On 14 September 2020, in accordance with the terms of the JHI share
purchase agreements, the Company issued a total of 9,440,000 new
nil par value ordinary shares for 800,000 JHI shares. This represented
a non-cash transaction. The total valuation of the Company's share
issue was GBP1,391,928.
There were no share redemptions during the year ended 30 June 2021
(2020: GBPNil).
14. SHARE-BASED PAYMENT RESERVE
2021 2020
GBP GBP
At 1 July 443,793 444,846
Share options expense/(credit) 25,877 (1,053)
At 30 June 469,670 443,793
-------- --------
On 6 August 2020 750,000 share options were granted with an exercise
price of 17.0 pence per share and an expiration date of 31 July
2023. The options issued on 3 January 2017 were extended on 1 November
2019 with a new expiry date of 31 December 2021.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
14. SHARE-BASED PAYMENT RESERVE (Continued)
The following assumptions were used to determine the fair value
of the options for 2020 and 2021: 2020 2021
Weighted average share price at grant date
(pence) 13.75 15.00
Exercise price (pence) 14.0 17.0
Expected volatility (%) 42.2% 45.8%
Average option life (years) 5.0 7.7
Risk free interest rate (%) 0.380% 0.550%
The expected volatility is based on the historic volatility of
the Company's share prices over the last five years.
The number and weighted average exercise price of share options
are as follows:
2021 2021 2020 2020
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
(p) (p)
Outstanding at start
of the year 10.10 3,750,000 10.10 3,750,000
Granted during the
year 17.00 750,000 - -
Exercised during the - - - -
year
Outstanding at end
of the year 11.25 4,500,000 10.10 3,750,000
---------- ------------ ---------- ------------
Exercisable at end
of the year 11.25 4,500,000 10.10 3,750,000
---------- ------------ ---------- ------------
None of the options expired during the year.
15. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial
risks: market risk (including foreign exchange risk, price risk
and interest rate risk), credit risk and liquidity risk. The Company's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects
on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling.
The Company is exposed to currency risk through its investments
in Cataleya, JHI and Ratio. The directors have not hedged this
exposure.
Currency exposure as at 30 June: Assets and Assets and
net exposure net exposure
2021 2020
Currency GBP GBP
US Dollars 4,717,997 5,786,083
Canadian Dollars 9,271,921 6,175,069
Israeli Shekel 14,913 751,819
Total 14,004,831 12,712,971
------------------------- -------------------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
15. FINANCIAL RISK (continued)
If the value of sterling had strengthened by 5% against all of
the currencies, with all other variables held constant at the reporting
date, the equity attributable to equity holders and the profit
for the period would have decreased by GBP700,242 (2020: GBP635,649).
The weakening of sterling by 5% would have an equal but opposite
effect. The calculations are based on the foreign currency denominated
financial assets as at year end and are not representative of the
period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows
of a financial instrument will fluctuate due to changes in market
prices. The Company is exposed to price risk on the investments
held by the Company and classified by the Company on the Statement
of Financial Position as at fair value through profit or loss.
To manage its price risk, management closely monitor the activities
of the underlying investments.
The Company's exposure to price risk is as follows: Fair value
GBP
Fair Value Through Profit or Loss, as at 30 June 2021 14,465,631
Fair Value Through Profit or Loss, as at 30 June 2020 12,079,736
With the exception of JHI and Cataleya, the Company's investments
are all publicly traded and listed on either the AIM, OTCQB or
the Tel Aviv Stock Exchange. A 30% increase in market price would
increase the pre-tax profit for the year and the net assets attributable
to ordinary shareholders by GBP142,714 (2020: GBP340,761). A 30%
reduction in market price would have decreased the pre-tax profit
for the year and reduced the net assets attributable to shareholders
by an equal but opposite amount. 30% represents management's assessment
of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI and Cataleya would increase
the pre-tax profit for the year and the net assets attributable
to ordinary shareholders by GBP4,196,975 (2020: GBP3,283,160).
A 30% reduction in market price would have decreased the pre-tax
profit for the year and reduced the net assets attributable to
shareholders by an equal but opposite amount. 30% represents management's
assessment of a reasonably possible change in the market price
of JHI and Cataleya based on the price of share purchases over
the last two years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to interest
rate risk as the interest rate on borrowings is fixed and the Company's
cash deposits do not currently earn interest.
b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet commitments it has entered into with
the Company. The Directors do not believe the Company is subject
to any significant credit risk exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets
exposed to credit risk amounted to the following: 2021 2020
GBP GBP
Cash and cash equivalents 1,218,922 2,435,664
---------- ----------
The Company considers that all the above financial assets are not
impaired or past due for each of the reporting dates under review
and are of good credit quality.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
15. FINANCIAL RISK (continued)
c) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities
as they fall due. The Company's primary source of liquidity consists
of cash and cash equivalents and those financial assets which are
publicly traded and held at fair value through profit or loss and
which are deemed highly liquid.
The following table details the contractual, undiscounted cash
flows of the Company's financial liabilities
As at 30 June 2021 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 39,534 - - 39,534
--------------- ------------- ------------ -------
39,534 - - 39,534
--------------- ------------- ------------ -------
As at 30 June 2020 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Borrowings(1) - 426,630 - 426,630
Trade and other payables 46,406 - - 46,406
46,406 426,630 - 473,036
--------------- ------------- ------------ --------
(1) Borrowings are presented in the above tables at their nominal
value which represents the undiscounted cash flow amount of the
convertible loan notes. These are measured at amortised cost. The
amount may differ from the discounted cash flow amount included
in the statement of financial position.
Capital Management
The Company's objective when managing capital is to safeguard the
Company's ability to continue as a going concern in order to provide
optimum returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce cost of
capital.
In order to maintain or adjust the capital structure, the Company
may issue new shares, return capital to shareholders or sell assets.
The Company does not have any debt nor is the Company subject to
any external capital requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through
profit or loss and fair value is determined via one of the following
categories:
Level I - An unadjusted quoted price in an active market provides
the most reliable evidence of fair value and is used to measure
fair value whenever available. As required by IFRS 7, the Company
will not adjust the quoted price for these investments, (even in
situations where it holds a large position and a sale could reasonably
impact the quoted price).
Level II - Inputs are other than unadjusted quoted prices in active
markets, which are either directly or indirectly observable as
of the reporting date, and fair value is determined through the
use of models or other valuation methodologies.
Level III - Inputs are unobservable for the investment and include
situations where there is little, if any, market activity for the
investment. The inputs into the determination of fair value require
significant management judgment or estimation.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2021
15. FINANCIAL RISK (continued)
The following table shows the classification of the Company's financial
assets and liabilities:
Level I Level II Level III Total
GBP GBP GBP GBP
At 30 June 2021 475,713 - 13,989,918 14,465,631
At 30 June 2020 1,135,869 (133,333) 10,943,867 11,964,403
The Company has classified quoted investments as Level I, derivative
financial instruments as Level II and unquoted investments as Level
III. The Level III investment is at an early stage of development
and therefore has been valued based on the recent price of the investment.
The Directors have considered market expectations of future performance
of the entity's industry sector, in particular known interest in
the area of current exploration. As such, the Directors consider
that the recent price of the investment in Cataleya and JHI fairly
reflects the value of the investments as at 30 June 2021. There have
been no movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown
below:
2021 2020
GBP GBP
At start of the year 10,943,867 4,655,621
Purchases 3,411,939 4,923,200
Change in fair value (365,888) 1,365,046
At end of the year 13,989,918 10,943,867
----------- -----------
16. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2021 2020 2021 2020
Directors' Directors' Options Options
fees fees outstanding outstanding
GBP GBP
D R King 20,000 20,000 500,000 500,000
D Corcoran - - 1,750,000 1,000,000
G Walsh 20,000 20,000 1,000,000 1,000,000
T O'Gorman 20,000 20,000 750,000 750,000
M Bradlow
(resigned 11 April
2017) - - 500,000 500,000
60,000 60,000 4,500,000 3,750,000
----------- ----------- ------------- -------------
At the year end the Company owed GBP10,000 (2020: GBP10,000) in outstanding
directors' fees.
During the year consultancy fees of GBP21,517 (2020: GBP21,551) were
paid to D Corcoran.
On 6 August 2020, 750,000 share options were granted to D Corcoran
with an exercise price of 17.0 pence per share and an expiration
date of 31 July 2023 (2020: nil). Nil (2020: nil) options were exercised
during the year.
The shares held by the Directors are declared in the Directors' report.
The Company does not employ any staff except for its Board of Directors.
The Company does not contribute to the pensions or any other long-term
incentive schemes on behalf of its Directors.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
17. RELATED PARTIES
On 31 October 2019 GBP100,000 of the principal, and GBP51,096 of
the interest, payable to Mr Walsh under the terms of the Convertible
Loan Notes was converted into 1,012,027 nil par value shares of the
Company.
On 31 March 2021 the convertible loan notes plus accrued interest
were repaid in full in the sum of GBP456,548 consisting of GBP400,000
of residual principal and GBP56,548 of accrued interest. Details
of the convertible loan notes are disclosed in note 11. The convertible
loan notes were held by Mr Walsh.
Canaccord Genuity as a significant shareholder of the Company is
considered a related party under AIM rules.
The shares held by the Directors are declared in the Directors' report.
18. CONTROLLING PARTY
In the opinion of the Directors, the Company does not have a controlling
party.
19. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events
subsequent to the year-end that require adjustment or disclosure
in the financial statements.
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END
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October 29, 2021 02:00 ET (06:00 GMT)
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