Audited results year ended 31 December 2016 | RNS | Ticker

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Audited results year ended 31 December 2016

RNS Announcement

RNS Number : 9153G

Echo Energy PLC

01 June 2017

Echo Energy plc

("Echo Energy" or the "Company" or the "Group")

Audited results for the year ended 31 December 2016

Chairman's statement

Echo Energy plc is a London listed Latin American focused mid-cap gas company in the making. The company

is pursuing a high-value, piped, onshore gas strategy across South and Central America, commencing with a

Multi Tcf potential exploration portfolio. Select corporate transactions in the region are also under evaluation.

On 6 March 2017, after the financial year end, the company announced a carefully orchestrated relaunch which saw the re-shaping

of the Board, the introduction of a cornerstone investor in the form of Greenberry plc, an associate of Continental Investment

Partners, an open offer as well as the renaming of the company. These elements combined to fully rebrand the

company and set a platform for a new and exciting journey.

The open offer was a vital component to that relaunch providing private investors in Echo an opportunity

to access this high growth vehicle, led and backed by an experienced and successful team, on the same terms as

our cornerstone investor. The fair treatment of private investors is central to the philosophy of Echo and will remain

so going forward.

On 18 April 2017, the company announced its decision to pursue a LATAM regional exploration strategy focused

on multi Tcf, low cost, onshore gas piped to high value, growing markets. This strategy was based on a combination

of elements, which included the recently increasing growth across the region, the increasing shortage of gas in the

major markets of Brazil and Argentina and a historic period of regional underinvestment in the sector. In combination,

we believe these provide a compelling investment proposition for investors at this specific point in the cycle.

Consequently, we have planned to rapidly acquire a series of assets across the region, including potential asset

acquisitions in Bolivia, Colombia, Argentina and Brazil, leveraging existing pipeline infrastructure and processing

capability which enables new discoveries to be brought to market quickly. In addition, we intend to selectively bring

in pre-identified strategic partners to the business to fund and technically de-risk such assets.

The company is now positioned for its bold and adventurous growth strategy, with approximately GBP 26M cash

and further access to capital if required.

The Echo Energy journey is underway…

Echo Energy plc

For further information please contact:

James Parsons Greg Coleman	Echo Energy plc Echo Energy plc	[email protected] [email protected]
John Treacy	ZAI Corporate Finance Ltd. (Nominated Adviser)	020 7060 2220
Oliver Stansfield Jonathan Evans	Brandon Hill Capital (Broker)	020 3463 5000
Patrick d'Ancona	Vigo Communications - PR Adviser	020 7830 9700

Consolidated statement of comprehensive income

Year ended 31 December 2016

Notes

Year to 31 December 2016

Year to 31 December 2015

Continuing operations

Revenue

Cost of sales

Gross profit

Administrative expenses

(7,091,475)

(1,652,631)

Other operating income

Operating loss

(7,091,475)

(1,652,631)

Financial income

144

351

Financial expense

(21,133)

(3,533)

Share of post-tax losses of equity

accounted joint ventures

(137,906)

(156,985)

Loss before tax

(7,250,370)

(1,812,798)

Taxation

Loss from continuing operations

(7,250,370)

(1,812,798)

Discontinued operations

Loss after taxation for the year from

discontinued operations

(3,814)

(96,269)

Loss for the year

(7,254,184)

(1,909,067)

Other comprehensive income:

Other comprehensive income to be reclassified to profit

or loss in subsequent periods (net of tax)

Exchange difference on translating foreign operations

807,370

(296,126)

Total comprehensive loss for the year

(6,446,814)

(2,205,193)

Loss attributable to:

Owners of the parent

(7,254,184)

(1,909,067)

Total comprehensive loss attributable to:

Owners of the parent

(6,446,814)

(2,205,193)

Loss per share (pence)

Basic

(18.6)

(26.7)

Diluted

(18.6)

(26.7)

Loss per share (pence) for continuing operations

Basic

(18.6)

(25.4)

Diluted

(18.6)

(25.4)

Echo Energy plc

Consolidated statement of financial position

As at 31 December 2016

Notes

31 December 2016

31 December 2015

Non-current assets

Property, plant and equipment

3,647

11,127

Goodwill

Other intangible assets

432,486

5,387,018

Investments in equity-accounted

joint ventures

137,906

436,133

5,536,051

Current assets

Other receivables

303,011

488,877

Cash and cash equivalents

184,849

101,300

487,860

590,177

Assets held for distribution

18,892

43,179

506,752

633,356

Current liabilities

Trade and other payables

(428,547)

(1,164,063)

Liabilities directly associated with the

assets held for distribution

(802)

(20,968)

(429,349)

(1,185,031)

Net current assets

77,403

(551,675)

Net assets

513,536

4,984,376

Equity attributable to equity holders of the parent

Share capital

2,430,612

2,159,247

Share premium

17,621,763

16,628,623

Deferred shares

Shares to be issued

277,468

Warrant reserve

714,977

302,453

Share option reserve

85,515

71,718

Foreign currency translation reserve

471,680

(335,690)

Retained earnings

(21,088,479)

(13,841,975)

Total equity

513,536

4,984,376

Echo Energy plc

Statement of changes in equity

Year ended 31 December 2016

Retained

Shares to

Warrant

Foreign

Total

earnings

capital

premium

be issued

reserve

option

currency

equity

reserve

translation

reserve

Consolidated

1 January 2015

(11,932,908)

1,051,434

16,302,050

25,776

(39,564)

5,406,788

Loss for the year

(1,909,067)

Exchange differences

(296,126)

Total comprehensive loss for the

year

(1,909,067)

(296,126)

(2,205,193)

New shares issued

1,107,813

405,334

1,513,147

New share warrants issued

302,453

Share issue costs

(78,761)

Share options lapsed

Share-based payments

45,942

31 December 2015

(13,841,975)

2,159,247

16,628,623

302,453

71,718

(335,690)

4,984,376

1 January 2016

(13,841,975)

2,159,247

16,628,623

302,453

71,718

(335,690)

4,984,376

Loss for the year

(7,254,184)

Exchange differences

807,370

Total comprehensive loss for the

year

(7,254,184)

807,370

(6,446,814)

New shares issued

264,065

887,329

1,151,394

New share warrants issued

412,524

Share issue costs

(9,889)

Share options lapsed

7,680

(7,680)

Share-based payments

7,300

115,700

277,468

21,477

421,945

31 December 2016

(21,088,479)

2,430,612

17,621,763

277,468

714,977

85,515

471,680

513,536

Echo Energy plc

Consolidated statement of cash flows

Year ended 31 December 2016

Year to 31 December 2016

Year to 31 December 2015

Cash flows from operating activities

Loss from continuing operations

(7,250,370)

(1,812,798)

Loss from discontinued operations

(3,814)

(96,269)

(7,254,184)

(1,909,067)

Adjustments for:

Depreciation of property, plant and equipment

5,441

5,372

Loss on disposal of property, plant and equipment

2,437

Impairment of intangible assets and goodwill

5,756,250

Share of post-tax loss of equity accounted joint ventures

137,906

156,985

Placing costs expensed

69,244

Share-based payments

421,945

45,942

Warrants issued

412,524

302,453

Financial income

(144)

(351)

Financial expense

21,133

3,533

(496,692)

(1,325,889)

(Increase)/decrease in other receivables

312,074

(289,826)

Decrease in net amounts held for disposal

4,121

(254,517)

Increase in trade and other payables

(731,190)

555,053

Cash used in operations

(911,687)

(1,315,179)

Income taxes received

Net cash used in operating activities

(911,687)

(1,315,179)

Cash flows from investing activities

Interest received

144

351

Interest paid

(21,133)

(3,533)

Acquisition of equity accounted joint venture

(294,891)

Purchase of intangible assets

(73,013)

Purchases of property, plant and equipment

(396)

(3,486)

Net cash used in investing activities

(21,385)

(374,572)

Cash flows from financing activities

Issue of share capital

1,026,510

1,513,147

Share issue costs

(9,889)

(148,005)

Net cash from financing activities

1,016,621

1,365,142

Net decrease in cash and cash equivalents

83,549

(324,609)

Cash and cash equivalents at 1 January 2016

101,300

425,909

Cash and cash equivalents at 31 December 2016

184,849

101,300

Basis of preparation

The company's functional currency is the Euro, and presentational currency is Great British Pounds Sterling.

The financial information has been prepared in accordance with International Financial Reporting Standards

("IFRS"), IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies preparing

their accounts under IFRS, as adopted by the European Union, and the Companies Act 2006. The financial

information has been prepared under the historical cost convention, as modified by revaluations of financial assets

and financial liabilities at fair value through the statement of comprehensive income. Details of the accounting

policies applied are set out in the financial statements for the year ended 31 December 2015 and have not

changed for the year ended 31 December 2016.

The financial information set out in this announcement does not constitute audited financial statements for the year

ended 31 December 2016. The financial information for the year ended 31 December 2015 is derived from the

statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on

those accounts: their report was qualified in respect of a limitation of scope in relation to financial information of the group's 25 per cent.

working interest in the East Ghazalat production licence (detailed below). The auditor's report for that year also included an emphasis of

matter in respect of the valuation of the group's development and exploration intangible asset and in relation to the group's ability to

continue as a going concern.

The financial information for the year ended 31 December 2016 is derived from the financial statements, but does not

constitute the group's financial statements. The company's auditors have reported on the statutory financial

statements for the year ended 31 December 2016 and their report is qualified, as follows:

Basis for qualified opinion on financial statements

The scope of our work was limited as a result of the following matter. As disclosed in Note 17 a dispute has arisen in relation

to the operation of the joint venture arrangements relating to the group's 25 per cent. working interest in the East Ghazalat

production licence, held through Independent Resources (Egypt) Limited, in which the group holds a 50 per cent interest (the

'Joint Venture'). During the reporting period the Joint Venture was served with notice of default in relation to cash calls raised

by North Petroleum International S.A. ("North Petroleum") the operator of East Ghazalat. The Joint Venture has rebutted the

claims from North Petroleum but the breakdown in relations has meant that operator North Petroleum has continued to refuse

to furnish financial information to allow a proper determination of licence costs and an audit of licence revenues to be

completed. As a consequence of the lack of access to primary accounting records we have been unable to obtain sufficient

appropriate audit evidence in relation to the group and company financial statements concerning:

•

the carrying value of £Nil of the group's investments in equity-accounted joint ventures as at 31 December 2016;

•

the carrying value of £85,565 of the company's investments in equity accounted joint ventures as at 31

December 2016; and

•

the group's share of any profit or loss attributable to the group's underlying interests in the East Ghazalat

licence for the period from 1 July 2015 to 31 December 2016.

Business segments

The group has adopted IFRS 8 Operating segments. Per IFRS 8, operating segments are based on internal reports

about components of the group, which are regularly reviewed and used by the Board of Directors being the Chief

Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate

resources to the segment and to assess its performance. The group's reportable operating segments are as follows:

Parent company

Rivara

Ksar Hadada

The previously reported segment of Ribolla Basin CBM assets has been classified as a discontinued operation and has been

excluded from the analysis below.

The CODM monitors the operating results of each segment for the purpose of performance assessments and

making decisions on resource allocation. Performance is based on assessing progress made on projects and

the management of resources used. Segment assets and liabilities are presented inclusive of inter-segment

balances.

The group did not generate any revenue during the year to 31 December 2016 nor in the year to 31 December 2015.

Information regarding each of the operations of each reportable segment within continuing operations is included in

the following table.

Parent

Rivara

Ksar Hadada

Consolidation

Total

company

Year to 31 December 2016

Interest revenue

57,331

(57,188)

144

Interest expense

(23,739)

(54,582)

57,188

(21,133)

Depreciation

5,431

5,441

Impairment of

intangible assets

5,756,250

Income tax

Loss before tax

(4,487,164)

(5,820,694)

(34,752)

3,092,240

(7,250,370)

Assets

1,579,091

1,596,601

433,226

(2,684,925)

923,993

Liabilities

(411,350)

(3,193,325)

(1,079,688)

4,255,816

(428,547)

Year to 31 December 2015

Interest revenue

92,800

7,107

(99,556)

351

Interest expense

(5,142)

(59,780)

61,389

(3,533)

Depreciation

5,335

5,372

Impairment of

intangible assets

Income tax

Loss before tax

(1,938,281)

(96,672)

(95,412)

317,567

(1,812,798)

Assets

4,763,050

6,352,843

442,739

(5,432,404)

6,126,228

Liabilities

(1,084,119)

(2,717,707)

(1,054,449)

3,692,212

(1,164,063)

Consolidation adjustments in respect of the loss before tax includes the loss of £137,906 (2015:£156,985) in relation to

equity accounted joint ventures.

Consolidation adjustments in respect of assets includes the loss of £294,891 (2015: £156,985) in relation to equity

accounted joint ventures.

The geographical split of non-current assets arises as follows:

United

Overseas

Total

Kingdom

31 December 2016

Intangible assets

432,486

Goodwill

Property, plant and equipment

3,647

31 December 2015

Intangible assets

5,387,018

Goodwill

Property, plant and equipment

11,119

11,127

Discontinued operations

The group was unable to find an investment partner for the coal bed methane opportunities at Fiume Bruna and Casoni,

in Italy, therefore, these opportunities will no longer be pursued. As a result the directors decided, prior to 31 December 2014,

to significantly reduce its activities in Italy and to discontinue the activities within Independent Energy Solutions srl which

dealt solely with these opportunities. With Independent Energy Solutions srl classified as discontinued operations, the

Ribolla Basin CBM assets segment is no longer presented in the segment note. The results of Independent Energy

Solutions srl, incorporating consolidation adjustments, are presented below:

Year to 31 December 2016

Year to 31 December 2015

Revenue

Administrative expenses

(3,814)

(96,272)

Operating loss before impairment

(3,814)

(96,272)

Impairment of the historic cost and carrying value of intangible

assets

Impairment of goodwill arising on acquisition of Independent Energy

Solutions srl - consolidation adjustment

Operating loss after impairment

(3,814)

(96,272)

Financial income

Financial expense

Loss on ordinary activities before taxation

(3,814)

(96,269)

Taxation

Loss for the year from discontinued operations

(3,814)

(96,269)

The major classes of assets and liabilities of Independent Energy Solutions srl classified as held for distribution to equity

holders of the parent as at 31 December 2016 are as follows:

31 December 2016

31 December 2015

Assets

Intangible assets - fully impaired

Property, plant and equipment

Other receivables

18,883

35,107

Cash and cash equivalents

8,072

Assets held for distribution

18,892

43,179

Liabilities

Trade and other payables

(802)

(20,968)

Liabilities directly associated with the assets held for distribution

(802)

(20,968)

Net assets directly associated with disposal group

18,090

22,211

The net cash flows incurred by Independent Energy Solutions srl are as follows:

Year to 31 December 2016

Year to 31 December 2015

Operating

(8,063)

(53,092)

Investing

Financing

Net cash (outflow)/inflow

(8,063)

(53,089)

Taxation

Year to 31 December 2016

Year to 31 December 2015

Tax on profit on ordinary activities

Taxation charged based on profits for the period

UK corporation tax based on the results for the period

Total tax expense in income statement

Reconciliation of the tax expense

The tax assessed for the year is different from the standard rate of corporation tax in the UK of 20% (2015: 20.25%). The differences are

explained below:

Year to 31 December 2016

Year to 31 December 2015

Loss on ordinary activities before taxation

(7,250,370)

(1,812,798)

Loss on ordinary activities multiplied by standard rate

of corporation tax in the UK of 20% (2015: 20.25%)

(1,450,074)

(367,092)

Effects of:

Expenses disallowed for tax purposes

1,281,268

29,283

Deferred tax not provided - tax losses carried forward

168,806

337,809

Total current tax

The group has tax losses available to be carried forward in certain subsidiaries and the parent. With anticipated

substantial lead times for the group's projects, and the possibility that these may therefore expire before their use, it is

not considered appropriate to anticipate an asset value for them.

No amounts have been recognised within tax on the results of the equity accounted joint ventures.

Loss per share

The calculation of basic and diluted loss per share at 31 December 2016 was based on the loss attributable to ordinary

shareholders of £7,254,184 The weighted average number of ordinary shares outstanding during the year ending

31 December 2016 and the effect of the potentially dilutive ordinary shares to be issued are shown below.

Year to 31 December 2016

Year to 31 December 2015

Net loss for the year

(7,254,184)

(1,909,067)

Basic weighted average ordinary shares

in issue during the year

38,962,494

7,149,778

Diluted weighted average ordinary shares

in issue during the year

38,962,494

7,149,778

Loss per share (pence)

Basic

(18.6)

(26.7)

Diluted

(18.6)

(26.7)

The company has consolidated all of the existing ordinary shares as at close of business on 22 May 2017 into ordinary shares

of 0.25 pence on the basis of one consolidated share for every 25 existing ordinary shares. As this consolidation happened

after the year end date but before the approval of the financial statements the weighted average number of ordinary shares

shown above has been adjusted for both years to reflect this change and the prior year loss per share figure has been re-stated.

In accordance with IAS 33 and as the average share price in the year is lower than the exercise price, the share options

do not have a dilutive impact on earnings per share for the year ending 31 December 2016.

Deferred shares have been excluded from the calculation of loss per share due to their nature. Please see note 8 for details

of their rights.

Other intangible assets (group)

Development and exploration

Rivara gas

Ribolla Basin

Ksar Hadada

Total

storage

CBM assets

exploration

facility

acreage

31 December 2016

Cost

1 January 2016

4,950,206

3,870,839

1,517,641

10,338,686

Exchange differences

806,044

630,291

1,436,335

Disposals

(4,326)

31 December 2016

5,756,250

4,501,130

1,513,315

11,770,695

Impairment

1 January 2016

3,870,839

1,080,829

4,951,668

Exchange differences

630,291

Impairment charge for the year

5,756,250

31 December 2016

5,756,250

4,501,130

1,080,829

11,338,209

Carrying amount

31 December 2016

432,486

31 December 2015

4,950,206

436,812

5,387,018

31 December 2015

Cost

1 January 2015

5,239,353

4,096,939

1,444,628

10,780,920

Exchange differences

(289,147)

(226,100)

(515,247)

Additions

73,013

31 December 2015

4,950,206

3,870,839

1,517,641

10,338,686

Impairment

1 January 2015

4,096,939

1,080,829

5,177,768

Exchange differences

(226,100)

Impairment charge for the period

31 December 2015

3,870,839

1,080,829

4,951,668

Carrying amount

31 December 2015

4,950,206

436,812

5,387,018

31 December 2014

5,239,353

363,799

5,603,152

The primary intangible assets are all internally generated.

For the purpose of impairment testing of intangible assets, recoverable amounts have been determined based

upon the value in use of the group's three projects.

Rivara gas storage facility

The Group holds a 100% interest in Rivara Gas Storage srl. Intangible assets include an amount of £5,756,000 with

respect to project expenditure. The regional council, Regione Emilia Romagna, where the project is located is

currently denying authorisation for project development. However authorisation has been granted by the national

government. As a result Rivara Gas Storage srl has appealed against this decision to the Emilia Romagna Bologna

Administrative Court.

Whilst the Group has obtained third party legal opinions regarding the appeal and believe that they would be successful in

their appeal it has been decided, for strategic reasons, to close its Italian operations and therefore this asset has been

impaired in full during the year.

Investments in equity-accounted joint ventures

Year to 31 December 2016

Cost

1 January 2016

294,891

Additions in year

31 December 2016

294,891

Impairment

1 January 2016

Impairment recognised in parent company

209,326

31 December 2016

209,326

Share of post-tax losses of equity accounted joint ventures

1 January 2016

156,985

Share of post-tax losses of equity accounted joint ventures for the year

137,906

31 December 2016

294,891

Carrying amount - Group

31 December 2016

31 December 2015

137,906

Carrying amount - Company

31 December 2016

85,565

31 December 2015

294,891

The group has a 50 per cent. interest in Independent Resources (Egypt) Limited a company incorporated in England &

Wales, whose purpose is to invest in the oil and gas exploration and production activities in the Arab Republic of Egypt.

The other shareholder in Independent Resources (Egypt) Limited (the "Joint Venture") is Nostra Terra Oil and Gas Company

plc ("Nostra Terra") a UK resident company whose shares are traded on the AIM market of the London Stock Exchange.

In October 2015 the Joint Venture acquired a 50 per cent. working interest in the East Ghazalat production licence located

in the Western Desert, Egypt from TransGlobe Energy Corporation through the acquisition of the entire share capital of

Trans Globe (GOS) Inc. a wholly-owned subsidiary of TransGlobe Energy Corporation ("TransGlobe). In December 2015,

the name of the acquired company was changed to Sahara Resources (GOS) Inc.

The total consideration for the transaction was $3.5 million of which $2.5 million had been deferred as a vendor loan

repayable by the Joint Venture on 30 September 2017. The loan note accrued interest at 10 per cent annum on the

principal sum, payable semi-annually. Nostra Terra and Echo Energy plc are joint and severally liable for the repayment of the

loan note.

The final loan note principal and semi-annual interest payable to Trans Globe have been settled during the year.

As a non-monetary long-term asset, the consideration for acquiring the share capital of Trans Globe GOS Inc. has been

recorded at the prevailing exchange rate at the time of completion of the acquisition but has not been retranslated at the

prevailing year-end exchange rate.

In January 2016 the Joint Venture was served with notice of default in relation to cash calls raised by North Petroleum

International S.A. ("North Petroleum") the operator of East Ghazalat.

The Joint Venture has rebutted the claims from North Petroleum but the current breakdown in relations has meant that

operator North Petroleum has been unwilling to furnish financial information to allow a proper determination of licence costs

and an audit of licence revenues to be completed.

In light of this lack of access to primary accounting records the results of the Joint Venture for the years ended 31

December 2015 and 31 December 2016 reflect the investment in Sahara Resources GOS Inc. at historical cost and the loan

note consideration payable to Trans Globe and the accrued costs of completing the related acquisition but do not

consolidate any share of profits or losses attributable to Sahara Resources GOS Inc. underlying interests in the East

Ghazalat licence for the period since 1 July 2015, the effective date of the transaction. The investment is reflected at its

estimated recoverable amount at the company level. In determining the group carrying value of the interest in

equity-accounted joint ventures, and consistent with IFRS 11, this has been written down to £nil by limiting the loss relating

to the group share of total comprehensive loss to £137,906.

The current liabilities of the Joint Venture at 31 December 2016 primarily reflects amounts due to Echo Energy

plc in respect of costs incurred by it to third parties in relation to the acquisition by the Joint Venture of Sahara Resources

GOS Inc.

Summarised financial information in relation to the joint venture is presented below:

31 December 2016

31 December 2015

As at 31 December

Current assets

943,026

Non-current assets

1,172,009

2,303,201

Current liabilities

(1,734,506)

(266,124)

Non-current liabilities

(2,286,990)

Included in the above amounts are:

Cash and cash equivalents

Current financial liabilities (excluding trade payables)

(1,734,506)

(266,124)

Non-current financial liabilities (excluding trade payables)

(2,286,990)

Net assets (100%)

380,529

(249,912)

Group share of net assets (50%)

190,265

(124,956)

Year ended 31 December

Revenues

Loss from continuing operations

(324,272)

(313,969)

Total comprehensive loss (100%)

(324,272)

(313,969)

Group share of total comprehensive loss (50%)

(162,136)

(156,985)

Included in the above amounts are:

Depreciation and amortisation

Interest income

Interest expense

143,559

36,277

Income tax expense

Share capital

31 December 2016

31 December 2015

Issued, called up and fully paid

2,293,749,294 0.01p (2015: 335,924,701 0.1p)

ordinary shares

1 January 2016

2,159,247

1,051,434

Equity shares issued

271,365

2,931,135

Sub-division of capital

(1,823,322)

31 December 2016

2,430,612

2,159,247

The holders of 0.01p ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per

share at meetings of the company.

In addition to the 0.01p ordinary shares detailed above, as part of capital reorganisations in 2015 and 2016, 202,591,368

deferred shares with a nominal value of 0.9p and 419,905,876 2016 deferred shares with a nominal value of 0.09p have been

created. The deferred shares and the 2016 deferred shares have no value or voting rights and the shareholders were not

issued with a share certificate, nor are they listed on AIM. These shares remain issued, called up and fully paid at the year end.

Further shares issued and the sub-division of capital during the year was as follows:

Date

Price

Shares issued

26/02/2016

6,000,000

0.6p

Shares issued

03/03/2016

77,981,175

0.12p

Sub-division of capital

25/04/2016

419,905,876

0.1p to 0.01p

Shares issued

16/05/2016

245,788,895

0.1p and 0.25p

Shares issued

01/06/2016

144,428,571

0.048p and 0.168p

Shares issued

03/06/2016

452,380,952

0.048p

Shares issued

18/07/2016

73,000,000

0.3p to 0.6p

Shares issued

09/12/2016

958,245,000

0.08p

Share premium account

31 December 2016

31 December 2015

1 January 2016

16,628,623

16,302,050

Premium arising on issue of equity shares

1,003,029

405,334

Transaction costs

(9,889)

(78,761)

31 December 2016

17,621,763

16,628,623

10.

Share-based payments

(a) Share Options

The share option scheme, which was adopted by the company on 25 November 2005, was established to reward and incentivise

the executive management team for delivering share price growth. The share option scheme is administered by the Remuneration

Committee.

On 4 March 2013 the company issued 200,000 share options to W G Coleman upon his appointment to the board

as chief executive officer.

On 10 October 2014 the company issued 4,205,734 share options in total to the directors, key management

personnel and their service companies as follows:

Individual

Number of options granted

W G Coleman (director)

2,628,583

O P T Franks (director)

525,717

F P McCole (key management personnel)

525,717

Rocky Mountain Limited (company controlled

by B Hepp, key management personnel)

525,717

4,205,734

On 27 February 2015, the company issued 1,050,000 share options to non-director and non-key management personnel.

Details of the tranches of share options outstanding at the year end are as follows:

Date of grant

01/01/2016

Issued/

31/12/2016

Date from which

Lapse

Exercise

Number of

lapsed in

Number of

options may be

date

Price per

options

the year

options

first exercised

option

04/03/2013

200,000

04/03/2013

03/03/2023

10/10/2014

4,205,734

(525,717)

3,680,017

10/10/2015

10/10/2024

27/02/2015

1,050,000

27/02/2016

27/02/2025

The options outstanding at the end of the year have a weighted average remaining contractual life of 0.75 years for the options

issued on 10 October 2014, and 1.17 years for the options issued on 27 February 2015. Those issued on 4 March 2013

are considered to have no remaining contractual life.

The fair values of the options granted on 4 March 2013 were calculated using the Black-Scholes option pricing model. The

inputs into the model were as follows:

Weighted average share price

10.62p

Weighted average exercise price

Expected volatility

92.00%

Expected life

10 years

Risk free rate

2.10%

Expected dividend yield

Nil

The fair values of the options granted on 10 October 2014 were calculated using the Black-Scholes option pricing model.

The inputs into the model were as follows:

Weighted average share price

2.12p

Weighted average exercise price

Expected volatility

85.00%

Expected life

10 years

Risk free rate

2.22%

Expected dividend yield

Nil

The average fair value of share options granted in the year was 1.716p each.

The outstanding share options are not subject to any share-performance related vesting conditions but vesting is conditional

upon continuity of service.

The expected volatility was determined with reference to the company's share price since it was admitted for trading on AIM

in December 2005. The expected life used in the model has been adjusted, based on management's best estimate, for the

effects of non-transferability, exercise restrictions and behavioural considerations.

The fair values of the options granted on 27 February 2015 were calculated using the Black-Scholes option pricing model.

The inputs into the model were as follows:

Weighted average share price

1.62p

Weighted average exercise price

Expected volatility

87.00%

Expected life

10 years

Risk free rate

1.73%

Expected dividend yield

Nil

The average fair value of share options granted in the year was 1.28p each.

The outstanding share options are not subject to any share-performance related vesting conditions but vesting is conditional

upon continuity of service.

The expected volatility was determined with reference to the company's share price since it was admitted for trading on AIM

in December 2005. The expected life used in the model has been adjusted, based on management's best estimate, for the

effects of non-transferability, exercise restrictions and behavioural considerations.

The group recognised total expenses of £21,477 (2015: £45,942) related to equity-settled, share-based payment transactions

relating to share options during the year.

A deferred taxation asset has not been recognised in relation to the charge for share-based payments due to the availability

of tax losses available to be carried forward.

(b) Warrants over ordinary shares

The company issued warrants over ordinary shares to the company to subscribers of new ordinary shares and as fundraising commission in

respect of equity fundraisings completed during the years to 31 December 2015 and 31 December 2016.

On 8 May 2015 the company issued warrants to subscribe for 9,200,000 ordinary shares at an exercise price of 1.50p.

On 8 May 2015 the company issued warrants to subscribe for 4,000,000 ordinary shares at an exercise price of 1.20p.

On 28 May 2015 the company issued warrants to subscribe for 30,800,000 ordinary shares at an exercise price of 1.50p.

On 21 July 2015 the company issued warrants to subscribe for 8,724,019 ordinary shares at an exercise price of 1.50p.

On 18 November 2015 the company issued warrants to subscribe for 133,333.333 ordinary shares at an exercise price of 1.00p.

On 18 November 2015 the company issued warrants to subscribe for 6,000,000 ordinary shares at an exercise price of 0.72p.

On 9 December 2016 the company issued warrants to subscribe for 1,006,157,250 ordinary shares at an exercise price of 0.12p.

Details of the tranches of warrants outstanding at the year-end are as follows:

Date of issue

01/01/2016

Issued/

31/12/2016

Date from which

Lapse

Exercise

Number of

lapsed in

Number of

warrants may be

date

price of

warrants

the year

warrants

first exercised

warrants

08/05/2015

9,200,000

08/05/2015

28/05/2017

1.50p

08/05/2015

4,000,000

08/05/2015

28/05/2018

1.20p

28/05/2015

30,800,000

28/05/2015

28/05/2017

1.50p

21/07/2015

8,724,019

21/07/2015

28/05/2017

1.50p

16/11/2015

133,333,333

16/11/2015

18/11/2017

1.00p

16/11/2015

6,000,000

16/11/2015

18/11/2018

0.72p

09/12/2016

958,245,000

09/12/2016

09/12/2018

0.12p

09/12/2016

47,912,250

09/12/2016

09/12/2018

0.08p

A charge to the profit and loss account has been taken in compliance with IFRS2 in respect of the fair value of warrants

issued to brokers in relation to fundraising services provided as set out below:

The fair value of the 1.20p warrants issued on 8 May 2015 was calculated using the Black-Scholes option pricing model.

The inputs into the model were as follows:

	Weighted average share price	1.05p
	Weighted average exercise price	1.20p
	Expected volatility	88.00%
	Expected life	3 years
	Risk free rate	1.93%
	Expected dividend yield	Nil

	The average fair value of warrants granted was 0.57p each.

	The fair value of the 0.72p warrants issued on 18 November 2015 was calculated using the Black-Scholes option pricing
	model. The inputs into the model were as follows:

	Weighted average share price	0.60p
	Weighted average exercise price	0.72p
	Expected volatility	85.00%
	Expected life	3 years
	Risk free rate	1.95%
	Expected dividend yield	Nil

	The average fair value of warrants granted was 0.31p each.

	The fair value of the 0.12p warrants issued on 9 December 2016 was calculated using the Black-Scholes option pricing
	model. The inputs into the model were as follows:

	Weighted average share price	0.08p
	Weighted average exercise price	0.12p
	Expected volatility	125.00%
	Expected life	2 years
	Risk free rate	1.46%
	Expected dividend yield	Nil

	The average fair value of warrants granted was 0.041p each.

	The group recognised total expenses of £Nil (2015: £5,686) related to equity-settled, share-based payment transactions
	relating to warrants over ordinary shares during the year.

	A deferred taxation asset has not been recognised in relation to the charge for share-based payments due to the availability
	of tax losses available to be carried forward.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR UGURAQUPMGCG

RNS metadata

Title: Audited results year ended 31 December 2016
Time: 17:05:28
Date: 1 Jun 2017
Category: Results
ID: 9153G