Interim Results & Sentiance Update

 

Going concern

 

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assume that the Company will be able to realise its assets and discharge its liabilities in the normal course of operations. The Company has no current source of recurring operating revenues and its capacity to operate as a going concern in the near-term will likely depend on its ability to continue raising equity or debt financing. There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realise on its assets and discharge its liabilities in the normal course of business, the net realisable value of its assets may be materially less than the amounts recorded in the Consolidated Statement of Financial Position. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

 

 

 

2.    SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2017.

 

 

 

3.    CAPITAL AND FINANCIAL RISK MANAGEMENT

 

The capital of the Group consists of shareholders' equity. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern and to maintain optimal returns to shareholders and benefits for other stakeholders.

 

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue new shares or debt, dispose of assets, or adjust the amount of cash and cash equivalents.

 

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable. There were no changes in the Group's approach to capital management during the period ended 30 September 2017. The Group is not subject to externally imposed capital requirements.

 

Credit risk

All the Group's cash and cash equivalents are held with well-known and established financial institutions. As such, management considers credit risk related to these financial assets to be minimal. The Group's maximum credit risk exposure is limited to the carrying value of its cash and subscriptions receivable. Cash and cash equivalents at the period end include £2,411,394 which was held by the Company's legal advisors.

 

 

 

Commodity price risk

The Group is currently in its development stage and as such exposure to fluctuations in commodity prices is not actively managed.

 

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Group does not have a material exposure to this risk as there are no outstanding debt facilities.

 

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they come due. The Group ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Group's reputation.

The Group utilises authorisation for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources.

 

Foreign currency risk

The Group has limited exposure to foreign currency fluctuations on its cash which is denominated in U.K. Sterling.

 

 

 

4.    EXCEPTIONAL ITEMS

 

	6 months ended 30 September 2017 Unaudited	6 months ended 30 September 2016 Unaudited
	£	£
Professional costs re: Investment in Sentiance, capital raising and intended move to the Standard UK list of the Main Market	400,000	-
Provision for potential VAT repayment relating to period prior to appointment of new Board	57,218	-
Other legal and professional fees	11,188	-
	468,406	-

 

 

 

5.    INVESTMENTS

 

a)    Available for sale financial assets

 

Cost	£
At 1 April 2017	1,368,632
Additions	-
30 September 2017	1,368,632

 

 

 

 

Impairment	£
At 1 April 2017	768,632
Impairment in period	-
At 30 September 2017	768,632

 

 

Net book value	£
At 1 April 2017	600,000
At 30 September 2017	600,000

 

The Company has agreed to dispose of the investments in Viet Energy Ltd and MOWISAT Mexico SAPI for a total cash consideration of £600,000. The initial £100,000 of the consideration was received during the period, is non refundable and has therefore been recognised as income in the period.

 

b)    Investment in subsidiary undertaking

 

The Company has a 100% shareholding in Mercom Oil Sands Canada Inc, a dormant company incorporated in Canada which is in the process of being wound up.

 

 

 

6.    SHARE CAPITAL

 

a)    Shares authorised

 

On 16 July 2014 the Company consolidated its share capital so that every 50 Ordinary shares of £0.001 in the issued share capital of the Company was consolidated into one Ordinary share of £0.05 (New Ordinary share). Each New Ordinary share would have the same rights and would be subject to the same restrictions as an Ordinary share. Following the consolidation, the New Ordinary shares were sub divided into one Ordinary share of £0.001 and one Deferred share of £0.049.

 

On 24 January 2017 the Company purchased and cancelled the 11,238,797 Deferred shares.

 

On 1 March 2017 the Company cancelled the capital redemption reserve and share premium account by Special Resolution, as confirmed by an Order of the High Court of Justice, Chancery Division.

 

b)    Ordinary shares issued

 

Called up, allotted and fully paid:

 

	30 September 2017	31 March 2017
	£	£
45,007,063 (31 March 2017: 42,452,063) Ordinary shares of £0.001	45,007	42,452

 

 

 

 

During the period 1,450,000 Ordinary shares were issued at 35p per share raising £507,500.

 

On 8 June 2017, 1,000,000 Ordinary shares were issued at 45p in respect of £450,000 of outstanding liabilities and financial commitments. On the same date 60,000 Ordinary shares were issued to the Company's former Company Secretary and 45,000 Ordinary shares in aggregate were issued to the Company's Directors at 40p per share in respect of their remuneration for the quarter up to 31 March 2017.

 

On 22 September 2017, it was announced that adjusted terms had been agreed on the Investment Warrants originally issued on 8 June 2017 which would result in the issue of 25,333,333 shares at 37.5p per share to raise £9.5m. At the period end £1,992,427 of cash had been received from subscribers in advance of issuing the underlying shares and this amount has been shown as a "shares to be issued" reserve at 30 September 2017.

 

c)    Share options

 

On 31 December 2016 the Board adopted the Directors and Senior Management Option Scheme. The initial exercise price under the Scheme was set at 35p per share, representing a premium of 19.7% to the closing mid market price of 29.25p per share on 30 December 2016. There was a subsequent grant made on 29 March 2017 with an exercise price under the Scheme at 80p per share, representing a premium on 139% to the closing mid market price of 33.5p per share on 28 March 2017.

 

		Number of options granted
		31 Dec 2016	29 March 2017
JP Tranié	Non-executive Director	2,000,000	-
F Simonsen	Finance Director	2,000,000	-
S Fry	Chairman	-	2,000,000

 

The options granted on 31 December 2016 and 29 March 2017 are exercisable at 35p per share and 80p per share respectively. The options of S. Fry and F. Simonsen vest over a three year period with 40% at the end of the first year, a further 30% at the end of the second year and the final 30% at the end of the third year. In the case of JP Tranié's options 1,250,000 shares vested on 30 September 2017 with 375,000 shares vesting on 31 March 2019 and a further 375,000 on 31 March 2020. The blended average price per outstanding option is 55.3p per share.

 

The maximum number of options that can be granted under this scheme is set at 10 million. It is the stated objective of the new Board that their interests will be strongly aligned with shareholders, being well rewarded only in the event of significant shareholder value creation in the medium to long term.