Half-year Report - replacement

UNAUDITED NOTES FORMING PART OF THE CONDENSED CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

For the six months ended 31 March 2016

 

1.     Accounting Policies

 

Basis of Preparation

 

The condensed interim financial information has been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The condensed interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial statements for the year ended 30 September 2015.

 

Going concern

 

The Directors have prepared a cash flow forecast, based on a reduced level of operations with costs scaled back, for the next 12 months from the date of approval of this financial information. This cash flow forecast indicates that the Group requires funding within the next few months to have sufficient cash to meet its liabilities and commitments in respect of operating expenditure for a period of at least 12 months. Christopher Brown, Chief Executive, has offered to provide the Company with £150,000 by way of a convertible loan note, the terms of which are currently being finalised, in addition the Directors are currently negotiating with the Group's advisors and a number of potential investors regarding an injection of new capital via a further equity raise, which would provide sufficient funds to allow the Group to meet its committed operating expenditure for at least the next 12 months. The Directors are confident of being able to raise the necessary funding.

 

The requirement to successfully raise funds by way of this further equity raise within the next few months has been identified as a material uncertainty which may cast significant doubt over the going concern assessment. Whilst acknowledging this uncertainty, based upon the expectation of completing a successful fundraising in the near future, the Directors consider it appropriate to continue to prepare this financial information of the Company on a going concern basis.  This financial information does not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

 

2.     Financial reporting period

 

The condensed interim financial information incorporates comparative figures for the interim period 1 October 2014 to 31 March 2015 and the audited financial year to 30 September 2015. The condensed interim financial information for the period 1 October 2015 to 31 March 2016 is neither audited or reviewed. In the opinion of the Directors the condensed interim financial information for the period presents fairly the financial position, results from operations and cash flows for the period in conformity with the generally accepted accounting principles consistently applied.

 

The financial information contained in this interim report does not constitute statutory accounts as defined by the Isle of Man Companies Act 2006. It does not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2015 Annual Report. The comparatives for the full year ended 30 September 2015 are not the Company's full statutory accounts for that year. The auditors' report on those accounts was unqualified, but included an emphasis of matter in respect of going concern, without qualifying their report and did not contain a statement under the provisions of the Isle of Man Companies Act 2006.

 

 

3.     Revenue

 

Revenue is attributable to one continuing activity, which is oil production from a wholly-owned subsidiary of the Group, located in the United States.

 

4.     Operating Loss

	Unaudited Six months  ended 31 March (unaudited)	Unaudited Six months  ended 31 March (unaudited)	Audited Year ended 30 September (audited)
	2016	2015	2015
The following items have been charged in arriving at operating loss:	£'000	£'000	£'000
Directors' fees	85	149	293
Auditors' remuneration:
- audit services	-	-	27
Rentals payable in respect of land and buildings	3	3	6

 

5.     Loss per share

 

Basic loss per share is calculated by dividing the losses attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Reconciliations of the losses and weighted average number of shares used in the calculations are set out below.

 

	Losses	Weighted average number of shares	Per share amount
Six months ended 31 March 2016	£'000	'000	Pence
Basic and Diluted EPS
Losses attributable to ordinary shareholders on continuing operations	(207)	1,963,205	(0.01)
Total losses attributable to ordinary shareholders	(207)	1,963,205	(0.01)

 

	Losses	Weighted average number of shares	Per share amount
Six months ended 31 March 2015	£'000	'000	Pence
Basic and Diluted EPS
Losses attributable to ordinary shareholders on continuing operations	(307)	1,989,157	(0.02)
Total losses attributable to ordinary shareholders	(307)	1,989,157	(0.02)

 

	Losses	Weighted average number of shares	Per share amount
Financial year ended 30 September 2015	£'000	'000	Pence
Basic and Diluted EPS
Losses attributable to ordinary shareholders on continuing operations	(716)	1,999,455	(0.04)
Total losses attributable to ordinary shareholders	(716)	1,999,455	(0.04)

 

6.             Intangible assets

 

	Oil & Gas	Oil & Gas
	Exploration and development licence	Technology licence	Total
	£'000	£'000	£'000
Cost
At 1 October 2014	7,501	1,314	8,815
Additions	117	-	117
At 31 March 2015 (unaudited)	7,618	1,314	8,932
Additions	1	-	1
At 30 September 2015 (audited)	7,619	1,314	8,933
Additions	-	-	-
At 31 March 2016 (unaudited)	7,619	1,314
Net book value
At 31 March 2016	7,619	1,314	8,933
At 30 September 2015	7,619	1,314	8,933
At 31 March 2015	7,618	1,314	8,932

 

The exploration and development licences comprise two State of Utah oil shale leases covering approximately 2,919 acres and independent natural resources consultants SRK Consultants Ltd, part of the internationally recognised SRK Group, declared a surface mineable JORC compliant Measured Resource of 126 million barrels on the main tract of TomCo's Holliday Block lease in 2012. The claim areas and the Group's interest in them is:

 

Asset                     Per cent                 Licence

 Interest                Status                    Expiry Date           Licence Area (Acres)

ML 49570              100                         Prospect                31/12/2024           1,638.84                                               

ML 49571              100                         Prospect                31/12/2024           1,280.00               

 

The resource assessments in relation to its oil shale leases, by their nature, involve a significant degree of judgment and estimation regarding economic inputs.  As such, changes to those inputs may result in changes to the estimated resources. In addition, if the required additional funding was not to be made available to the company to develop the oil shale leases, the carrying value of the asset might need to be impaired. 

 

The oil and gas technology licence was signed in 2010 and grants to TomCo an exclusive, site-specific license of certain patent rights and "know how" relating to the EcoShale In-Capsule Process ™, developed by Red Leaf Resources Inc. ("Red Leaf"). Under the terms of the License, Red Leaf has agreed to provide TomCo with all new patents, techniques, information and new discoveries in relation to the EcoShale™ system. The technology is planned for use in the Group's oil shale lease interests. Initial test results from the testing of the EcoShale™ technology showed that the technology works on a small scale and Red Leaf and Total previously planned to construct the EPS capsule with design optimisation following thereafter.  Red Leaf and Total have subsequently agreed to defer building the EPS capsule and will use the period to accelerate the commercial technology optimization of the Ecoshale technology; with Total continuing to demonstrate their continued long term commitment to the project. 

 

The Directors, having considered the carrying value of the licenses as at 31^st March 2016, have concluded that it was not appropriate to book an impairment.

 

7.             Available‑for‑sale financial assets

 

In March 2012, the Company invested $5 million in Red Leaf Resources Inc at $1,500 per share as part of a $100 million raising by Red Leaf in conjunction with the closing of a Joint Venture ("JV") with Total E&P USA Oil Shale, LLC, an affiliate of Total SA, the 5^th largest international integrated oil and gas company.

 

The directors consider that the fair value of the investment cannot be reliably measured and so, as permitted by IFRS, the asset is stated at original cost. The directors have considered all information available in relation to Red Leaf and not identified any data which could provide a reliable fair value. The directors consider that the carrying value of the investment in Red Leaf remains dependent on the success of the Ecoshale technology.  Whilst Red Leaf and Total have agreed (as announced on 6^th October 2015) to defer building the EPS capsule, they have stated that they will use the delay to accelerate the commercial technology optimization of the Ecoshale technology. Total have demonstrated their continued long term commitment to the project, and as such the directors do not consider the asset to be impaired given the continued progression of the technology and forecast increases in future oil prices as at year end. There is a risk that in the future this investment falls in value and the Group is unable to realise its accounting value, due for instance to to the technology ultimately proving unsuccessful or uneconomic as a result of a sustained depression in future global oil prices.  The Company's plans for the investment remain dependent on the progression of the Ecoshale technology and other market factors.

 

8.             Share Capital

		Six months ended 31 March 2016   (Unaudited)	Six months ended 31 March 2015   (Unaudited)	Year  ended 30 September 2015   (Audited)
	Number of shares	£	£	£
Issued and fully paid
At 1 October		10,362,279	10,362,279	10,362,279
Allotted	-	-	-	-
Balance at 31 March 2016: 2,072,455,744 shares (March 2015: 2,072,455,744; September 2015: 2,072,455,744) ordinary shares of £0.005 each		10,362,279	10,362,279	10,362,279
Balance of shares issued under Promissory Note not called up:
Balance at 31 March 2016: 39,430,800 shares (March 2015: 76,615,831; September 2015: 45,780,800) ordinary shares of £0.005 each		(197,154)	(383,079)	(228,904)
		10,165,125	9,979,200	10,133,375

In 2013, the Group entered into a Liquidity Facility Agreement and an associated Promissory Note (together the "Liquidity Facility") with Windsor Capital Partners Limited ("Windsor Capital"). Under the Liquidity Facility TomCo issued and allotted 100 million ordinary shares of 0.5p each ("Ordinary Shares") to Windsor Capital in exchange for the Promissory Note. The Promissory Note delivers the proceeds of the sale of the Ordinary Shares over the life of the Promissory Note based on the occurrence of "Liquidity Trigger Days". Liquidity Trigger Days are those days on which the volume of shares traded is greater than 80% of the trailing 90 day weighted average daily trading volume. On Liquidity Trigger Days, Windsor Capital will seek to sell Ordinary Shares, up to a maximum of 10% of the daily volume averaged over any 5 day period, on a best effort basis at the AIM Market offer-price or higher. The Liquidity Facility was suspended on 28 May 2013, and reinstated on 23 September 2013 amended by way of introducing a floor price of 2p per share and limiting the maximum net amount raised following the announcement to one million pounds. These amended conditions were removed in May 2014. Shares which remain unsold at the reporting date are not included within the share capital and share premium account as they are not considered called up.

In September 2014, the Group also raised £1.0 million before expenses through a conditional share placing of 200,000,000 new ordinary shares of 0.5p each at a price of 0.5p per share. The placing completed in full on 2 October 2014 with all cash proceeds received in October 2014. The proceeds were included as receivables at 30 September 2014.