Annual Report and Financial Statements 2017

Statement of cash flows for the year ended 31 December 2017

_____________________________________________________________________________________
 

	Notes	2017	2016
		£'000	£'000
Cash flows from operating activities
Loss before taxation		(1,152)	(115)
Adjustments:
Impairment	9	150	-
Share based payments	13	559	-
Provisions	11	101	-
Realised foreign exchange gain		(6)	-
Operating cash flows before movement in working capital		(348)	(115)
(Increase)/decrease in receivables		(29)	-
Increase/(decrease) in payables and accruals		54	(26)
(Increase)/decrease in prepayments		(32)	-
Net cash used in operating activities		(355)	(141)
Cash flows from investing activities
Purchase of available for sale investments	9	(795)	-
Proceeds from divestment of available for sale investments	9	302	-
Net cash used in investing activities		(494)	-
Cash flows from financing activities
Share placement net proceeds	12	5,816	-
Net cash generated from financing activities		5,816	-
Net increase/(decrease) in cash and cash equivalents		4,967	(141)
Cash and cash equivalents at the beginning of the period		340	481
Cash and cash equivalents at the end of the period		5,307	340
Cash and cash equivalents comprises:
Cash and cash equivalents		5,307	340
Overdraft and borrowings		-	-
		5,307	340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

 

Reabold Resources Plc is a public limited company registered in England and Wales under the Companies Act and limited by shares. Registered in England number 3542727 at 20 Primrose Street, London EC2A 2EW. The nature of the Company's operations and its principal activities are set out in the Directors' report on pages 10 to 12.

 

1.          Preparation of financial statements

 

Standards, amendments and interpretations in issue but not yet effective

 

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company.

 

Management anticipates that all of the pronouncements will be adopted in the Company's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company's financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company's financial statements.

 

IFRS 9 "Financial Instruments"

 

The IASB have released IFRS 9 following completion of the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. The new standard introduces extensive changes to IAS 39's guidance on the classification and measurement of financial assets and introduces a new 'expected credit loss' model for the impairment of financial assets. IFRS 9 also provides new guidance on the application of hedge accounting. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018 and has been endorsed by the European Union.

 

IFRS 15, 'Revenue from Contracts with Customers'

 

IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related interpretations. The new standard establishes a control-based revenue recognition model and provides additional guidance in many areas not covered in detail under existing IFRSs. These include how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common complexities. IFRS 15 is effective for reporting periods beginning on or after 1 January 2018. This standard has been endorsed by the European Union.

 

IFRS 16 "Leases"

 

The IASB has published IFRS 16 'Leases', completing its long-running project on lease accounting. The new Standard, which is effective for accounting periods beginning on or after 1 January 2019, requires lessees to account for leases 'on-balance sheet' by recognising a 'right-of-use' asset and a lease liability. It will affect most companies that report under IFRS and are involving in leasing, and will have a substantial impact on the financial statements of lessees of property and high value equipment. This standard has been endorsed by the European Union.

 

The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Company in future periods. The Company's management will undertake a review of the impact on the Company of the above new standards during 2018.

 

2.          Summary of significant accounting policies
 

Basis of accounting

The 2017 financial statements are prepared under International Financial Reporting Standards, as adopted for use by the European Union.

The financial statements have been prepared on the going concern basis and historical cost basis, except that the following assets and liabilities are stated at their fair value: financial instruments classified as fair value through the profit and loss.

The financial statements are presented in sterling, the currency of the primary economic environment in which the Company operates and in which the majority of the Company's transactions are denominated.

The principal accounting policies adopted are set out below.

 

 

Going concern

The financial statements have been prepared on the going concern basis. The Directors have prepared cash flow forecasts for the period ending 30 June 2019 which take account of the current cost and operational structure of the Company and investment agreements. These forecasts demonstrate that the Company has sufficient cash funds available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

Taxation

The tax charge represents the sum of current and deferred tax. 

Current tax payable is based on taxable profits for the year. Taxable profits differ from net profits as reported in the income statement because it excludes items that are taxable or deductible in other years and items that are not taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets are offset when there is a legally enforceable right to offset current tax assets against current liabilities and when deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on either the same taxable entity or different taxable entity where there is an intention to settle on a net basis.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability or the asset is realised.

Currencies

Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. Monetary items in the statement of financial position are retranslated at the closing exchange rate at each statement of financial position date, and the resulting translation differences are recorded in profit or loss.

Impairment of investments available for sale

At each reporting date, if there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the  recoverable amount, which is calculated using the Value in Use method. Any impairment loss is recognised immediately in the Statement of Comprehensive Income. Such impairment losses shall not be reversed.

Share based payments

The Company has an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

•   Including any market performance conditions;

•   Excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period; and

•   Including the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

In addition, in some circumstances, employees may provide services in advance of the grant date, and therefore the grant-date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

 

 

At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium.

Financial instruments

Financial assets and financial liabilities are recognised in the Company's statements of financial position when the Company has become a party to the contractual provisions of the instrument.

Investments available for sale

Classification

 The Company classified its investments in unlisted shares that are not traded in an active market as available for sale at inception. Available for sale financial assets are non-derivatives that are either designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

 

Recognition

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investments.

 

Measurement

Unlisted Investments are initially recognised at cost, being the fair value of consideration given. Where the Company has investments in equity instruments that do not have a quoted price in an active market and whose fair value cannot be reliably measured these are carried at historic cost less any identified impairment losses at the end of each reporting period.

 

Fair value hierarchy

IFRS 13 requires disclosure of fair value measurements by level of the following fair value hierarchy:

Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the entity can readily observe;

Level 2 - inputs are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly; and

Level 3 - inputs that are not based on observable market data (unobservable inputs).

 

Unlisted Investments are therefore classified at level 2 of the fair value hierarchy when initially recognised.

 

Loans and other receivables

Loans and other receivables are recognised initially at fair value and subsequently measured at amortised costs using the effective interest rate method, as reduced by appropriate provisions for estimated irrecoverable amounts less provision for impairment. A provision for impairment is accounted for when management deems the specific receivable balance not to be collectable. The amount of the impairment loss is recognised in the statement of comprehensive income.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term deposits and liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on the expected yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expect life of the expected financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. 

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that creates a residual interest in the assets of the Company.

 

Trade payables

Trade payables are stated at their amortised cost less any discount or rebate received.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Share premium

Representing the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

Capital redemption reserve

Where a company acquires its own shares out of free reserves, then a sum equivalent to the nominal value is transferred to a capital redemption reserve.

Share based payments reserve

Represents the value of equity benefits provided to employees and directors as part of their remuneration and provided to consultants and advisors hired by the Company from time to time as part of the consideration paid.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical accounting judgements, apart from those involving estimations (which are dealt with separately below), that the Directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

 

(a)  Critical judgements in applying the Company's accounting policy

In assessing whether there have been any indicators of impairment of assets, the Directors have considered both external and internal sources of information such as market conditions.

                                                                                                         

(b)  Key sources of estimation uncertainty

As the Company is an investing company, the key source of estimation uncertainty is the impairment review of unlisted investments. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

A further key source of estimation uncertainty is the calculation of share based payments. The Company uses the Black-Scholes option-pricing model where applicable, with inputs, in particular volatility, requiring significant judgement in application.

 

 

3.          Segment analysis

 

The segmental analysis relates to the operations of the Company, as these are individual financial statements of the Company. The Company has one reportable operating segment on the basis that it incurs expenses from one business activity; being investing, and on the basis that it currently operates in one geographical location; being Europe. During the current year, the Company did not generate any revenue from its investment activities.

 

 

 

 

4.          Loss on ordinary activities before taxation

		2017	2016
The loss on ordinary activities before taxation has been arrived at after charging/(crediting):	Note	£'000	£'000
Auditor's remuneration - audit of Company		15	12
Auditor's remuneration - other taxation advisory services		6	-
Impairment loss on available for sale investment	9	150	-
Provision for VAT non-claimable	11	101	-
Share based payments	13	599	-
Staff costs - Directors	5	121	55
Foreign exchange gain on disposal of available for sale investment		(6)	-

 

 

5.          Staff costs

 

Staff employment costs were:	2017	2016
	£'000	£'000
Wages and salaries	111	50
Social security costs	10	5
Other pension costs	-	-
	121	55

 

During the year there were no employees (2016: nil) employed by the Company excluding four Directors in administration roles.  The staff costs during the year include the accrual of director fees in the amount of £6,000 (2016: £16,000) which were not paid during the reporting period.

 

 

6.          Directors' remuneration

 

The emoluments paid to Directors during the year was as follows:

 

	Salary & fees		Share based payments		Pension contribution		2017 Total	2016 Total
	£'000		£'000		£'000		£'000	£'000
Executive Directors
Jeremy Edelman	24		-		-		24	24
Anthony Samaha	27		63		-		90	26
Sachin Oza	30		248		-		278	-
Stephen Williams	30		248		-		278	-
	111		559		-		670	50

An accrual of £6,000 for director fees which were unpaid during the reporting period has been made.

 

The directors are the key management personnel of the Company.

 

As at 31 December 2017, no Director was accruing benefits under a money purchase scheme (2016: none). The total options held by directors as at 31 December 2017 was 190,000,000. Sachin Oza and Stephen Williams each held 90,000,000 options which are exercisable at 0.5p, 0.75p and 1.0p up until 19 October 2021.  Anthony Samaha held 10,000,000 options exercisable at 0.5p up until 19 October 2021.

 

 

 

 

7.             Taxation on loss on ordinary activities

 

Factors affecting tax charge for the year:

 

The tax assessed for the year is higher than the standard rate of corporation tax in the UK 20.0% from 1 January 2017 to 1 April 2017 and 19.0% from 1 April 2017 (2016: 20%). 

                                                                                                                                                                        2017                        2016

                                                                                                                                                                       £'000                      £'000

                           

Loss on ordinary activities before tax                                                                                                      (1,152)                         (115)

                                                                                                                                                                                                                           

 

Loss on ordinary activities multiplied by standard rate

of corporation tax in the UK                                                                                                                           (221)                       (23)

 

Effects of:

Unrelieved tax losses                                                                                                                                         221                            23

                                                                                                                                                                                                                   

Total tax for the year                                                                                                                                             -                              -

                                                                                                                                                                                                                   

 

No deferred tax assets have been recognised in the year (2016: nil).

 

The corporation tax rate was 20.0% from 1 April 2014 to 1 April 2017 and 19.0% from 1 April 2017. Thus the corporation tax rate for the year ended 31 December 2017 is 19.25%.

 

The Company has unused tax losses of £2.2 million and capital losses of £2.5 million. The deferred tax asset for these losses, amounting to £914,000 (2016: £835,000) has not been recognised as the timing of profits is uncertain.

 

 

8.          Loss per share

 

The calculations of the basic and diluted earnings per share are based on the following data:				2017		2016
				£'000		£'000
Loss for the year				(1,152)		(115)
Loss for the purpose of basic earnings per share				(1,152)		(115)
				Number		Number
Number of shares
Weighted average number of ordinary shares in issue during the year				655,361,644		320,148,773
Effect of dilutive options				190,000,000		-
Diluted weighted average number of ordinary shares in issue during the year				845,361,644		320,148,773
Loss per share
Basic loss per share (pence)					(0.18)		(0.04)
Diluted loss per share (pence)					(0.14)		(0.04)

 

 

9.          Investments available for sale

	2017		2016
	£'000		£'000
At 1 January	200		200
Addition at cost - Tonsley	295		-
Divestment - Tonsley	(295)
Addition at cost - Corallian	500
Impairment - Mogul	(150)		-
At 31 December	550		200

 

On 19 April 2017, the Company announced that it had entered into an agreement to acquire an initial interest of approx. 2.0% in Tonsley for a consideration of AUD$0.5 million (approx. £0.3 million). Tonsley owns rights to earn up to 75% of the San Jose lithium project in Spain.  Tonsley has the right to earn a 75% interest in the Project by spending EUR1.5 million for a first stage 50%, then EUR2.5 million for the additional 25%.  After an agreed amount of time between the Parties or in the event no interest is earned by Tonsley (or its subsidiary) in the Project, there was an agreed contractual mechanism (by way of options) for the AUD$0.5 million funds to be returned to the Company. On 17 July 2017, the Company announced that it had delivered to Plymouth a Notice of Exercise of Put Option in respect of Reabold's interest in Tonsley, whereby Reabold wouldtransfer back to Plymouth its shares in Tonsley in consideration of receipt of AUD$0.5 million (approx. £0.3 million), payable on 18 July 2017. Whilst the Tonsley investment represented an interesting opportunity for Reabold, it was decided that this would not form a long term asset for Reabold and therefore that Reabold should exercise its put option and redeploy the money on other investments.

 

On 1 November 2017, the Company announced that it had entered into two share subscription agreements with Corallian to subscribe for 1,111,111 ordinary shares in the issued share capital of Corallian representing 35.4% of the issued share capital of Corallian for an aggregate subscription price of £1.5 million as follows:

i)      Reabold has entered into an unconditional share subscription agreement to subscribe for 370,370 ordinary shares in the issued share capital of Corallian ("Tranche A Shares") for an aggregate subscription amount of £0.5 million which amount is payable immediately against transfer to Reabold of the Tranche A Shares. The Tranche A Shares represent 15.4% of the issued share capital of Corallian.

ii)     Reabold has entered into a conditional share subscription agreement to subscribe for 740,741 ordinary shares in the issued share capital of Corallian ("Tranche B Shares") for an aggregate subscription amount of £1.0 million, representing 23.6% of the enlarged issued share capital of Corallian and which subscription is conditional upon the joint venture partners in licence P1918 in respect of the Colter appraisal project approving an authorisation for expenditure for the drilling of the Colter well prior to 30 April 2018 failing which Reabold's obligation to subscribe for the Tranche B Shares terminates. On issue of the Tranche B Shares to Reabold, and for so long as Reabold holds more than 30% of the issued share capital of Corallian, Reabold has the right to appoint a director to the board of directors of Corallian.

 

As outlined in the Chairman's Statement, the Directors have impaired the Company's investment in Mogul by £150,000 from a carrying value of £200,000 to £50,000, in view of Mogul's difficulties in attracting material financing to progress its tin project in Mongolia, despite the positive tin price trend.  It is noted that, in the opinion of the Directors, the fair value of the Company's investment in Mogul is challenging to reliably measure given the relatively early stage of development of the entity, and the limited availability of financial and technical information.  Accordingly the available for sale investments in Mogul has been measured at cost (less impairment) rather than fair value because the fair value cannot be measured reliably.

 

The Company has assessed the fair value of its investment in Corallian as at 31 December 2017 as £1.35 per share, applying the subscription price of the Corallian equity raising announced in November 2017.  It is noted that in February 2018, the Company announced that it was participating in a further fund raising by Corallian at a subscription price of £1.50 per share, following positive progress by Corallian in 2019.  

 

 

10.        Trade and other receivables

	2017	2016
	£'000	£'000
VAT receivable	30	1
	30	1

 

The receivable is in respect of VAT receivable for the December quarter.  All receivables are due within one year.  As outlined in Note 11, the Company has made a provision for the recoverability of the VAT receivable for the December 2017 quarter in the amount of £29,957.

 

 

 

 

11.        Provisions

	2017	2016
	£'000	£'000
At 1 January	-	-
Provisions - charge for the year	101	-
At 31 December	101	-

 

The Company has been advised by HRMC that following a review of its activities, HMRC has assessed the Company's investment activities is not a supply for consideration and as a result the Company cannot claim any Input Tax related to its investment activities.  HMRC had assessed that all expenses claimed since registration in December 2012 are related to investment activities and that it would be disallowing claimed Input Tax in the amount of £71,129 up to September 2017.  The Company has made a further provision for VAT receivable for the December 2017 quarter in the amount of 29,957.  The Company is in discussions with HMRC, in consultation with its taxation advisors, towards HMRC reversing this assessment and is awaiting a further response from HMRC.

 

 

12.        Share capital

 

	Number of ordinary shares	Nominal Value £	Total Value £'000
Issued at 31 December 2015	280,915,896	£0.001	281
On 8 January 2016, placing for cash at 0.5p per share	40,000,000	£0.001	40
Issued at 31 December 2016	320,915,896	£0.001	321
On 18 April 2017, placing for cash at 0.5p per share	73,500,000	£0.001	73
On 25 September 2017, placing for cash at 0.5p per share	792,000,000	£0.001	792
On 25 September 2017, debt for shares at 0.5p per share	2,000,000	£0.001	2
On 13 October 2017, placing for cash at 0.5p per share	352,000,000	£0.001	352
Issued at 31 December 2017	1,540,415,896	£0.001	1,540

 

"A" Deferred shares

The Company has in existence at 31 December 2016 and at 31 December 2017, 6,915,896 "A" deferred shares of 1.65p. These deferred shares do not carry voting rights.

Total ordinary and "A" Deferred shares

The issued share capital as at 31 December 2017 is as follows:

	Number of ordinary shares	Nominal Value £	Total Value £'000
Ordinary shares	1,540,415,896	£0.0010	1,540
"A" Deferred shares	6,915,896	£0.0165	114
Issued at 31 December 2017			1,654

 

The holders of ordinary shares are entitled to one vote per share at the meetings of the Company and to dividends as declared in proportion to the amounts paid up on the ordinary shares. No shares are of the Company are currently redeemable or liable to be redeemable at the option of the holder or the Company.

 

The holders of "A" Deferred shares do not have any right to receive written notice of or attend, speak or vote at any general meeting of the Company, or to any dividend declared by the Company. They may however be redeemed by the Company at any time at its option for one penny for all the "A" Deferred shares without obtaining sanction of such holders.

 

12.        Share capital (continued)

 

Share Options

During the year 190 million options were granted (2016: nil).

Exercise Price	Grant Date	Vesting Date	Expiry Date	Options in Issue 31 December 2017
0.50p	19 October 2017	19 October 2017	19 October 2021	70,000,000
0.75p	19 October 2017	19 October 2018	19 October 2021	60,000,000
1.00p	19 October 2017	19 April 2019	19 October 2021	60,000,000
				190,000,000

At 31^st December 2017 there were 190 million share options outstanding (2016: nil).

 

13.        Share based payments

 

Details of share options and warrants granted during the year to Directors over the ordinary shares are as follows:

 

Option Holder	At 1 January 2017 No.	Issued during the year No.	Lapsed / Exercised during the year No.	At 31 December 2017 No.	Exercise Price Pence	Vesting Date	Expiry Date
Sachin Oza	-	30,000,000	-	30,000,000	0.50p	19/10/2017	19/10/2021
Sachin Oza	-	30,000,000	-	30,000,000	0.75p	19/10/2018	19/10/2021
Sachin Oza	-	30,000,000	-	30,000,000	1.00p	19/04/2019	19/10/2021
Stephen Williams	-	30,000,000	-	30,000,000	0.50p	19/10/2017	19/10/2021
Stephen Williams	-	30,000,000	-	30,000,000	0.75p	19/10/2018	19/10/2021
Stephen Williams	-	30,000,000	-	30,000,000	1.00p	19/04/2019	19/10/2021
Anthony Samaha	-	10,000,000	-	10,000,000	0.50p	19/10/2017	19/10/2021
	-	190,000,000	-	190,000,000

 

The number and weighted average exercise prices of share options are as follows:

 

	2017		2016
	Weighted average exercise price	Number of options	Weighted average exercise price	Number of options
Outstanding at 1 January	-	-	-	-
Granted during the year	0.74	190,000,000	-	-
Forfeited during the year	-	-	-	-
Exercised during the year	-	-	-	-
Outstanding at 31 December	0.74	190,000,000	-	-
Exercisable at 31 December	0.74	70,000,000	-	-

 

The options outstanding at 31 December 2017 have a weighted average contractual life of 3.80 years (2016: Nil).

 

The closing share price range during the year ended 31 December 2017 was 0.32p to 0.98p.

 

The options issued during the year were all granted on 19 October 2017 and vest in tranches upon grant, 12 months from grant and 18 months from grant.  Should the option holder leave the Board prior to the vesting of their options, such options will be forfeited.

 

For the options granted, IFRS 2 "Share-Based Payment" is applicable, and the fair values were calculated using the Black-Scholes model. The inputs into the model were as follows:

 

 

	Risk free rate	Share price volatility	Expected life	Share price at date of grant
Granted 19 October 2017	0.72%	120%	4 years	0.77p

 

 

Expected volatility was determined by calculating the historical volatility of the Company's share price.

 

The Company recognised total expenses relating to equity-settled share-based payment transactions during the year of £559,000 (2016: nil).

 

 

14.        Trade and other payables

	2017	2016
	£'000	£'000
Trade and other payables	65	4
Accruals	21	28
	86	32

 

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.  All liabilities are due within one year.

 

15.           Related party transactions

 

There were no loans from related party as at 31 December 2016 and 31 December 2017.

During the year ended 31 December 2017, the Company incurred fees to Santannos Limited, a company associated with Anthony Samaha, for provision of accounting services in the amount of £3,000 (2016: nil).  As at 31 December 2017, an amount of £3,000 was included in accounts payable in respect of these fees.

The directors are the key management of the Company (refer to note 6).

 

 

16.           Commitments

 

On 1 November 2017, the Company announced it had entered into a conditional share subscription agreement to subscribe for 740,741 ordinary shares in the issued share capital of Corallian ("Tranche B Shares") for an aggregate subscription amount of £1.0 million, with the subscription conditional upon the joint venture partners in licence P1918 in respect of the Colter appraisal project approving an authorisation for expenditure for the drilling of the Colter well prior to 30 April 2018 failing which Reabold's obligation to subscribe for the Tranche B Shares terminates. As at 30 April 2018, no such authorisation for expenditure for the drilling of the Colter well had been approved. Subsequently, on 25 May 2018, Reabold advised Corallian that it waived the condition for the Tranche B Shares and proceeded to complete the Tranche B subscription on 28 May 2018 in the amount of £1.0 million.

 

On 4 December 2017, the Company announced that it had signed an agreement with Danube, a newly incorporated subsidiary of ASX listed ADX Energy Ltd, to invest a total of £1.5 million for a 29% interest in Danube. The investment was conditional on completion of a transaction between Danube and ADX Energy Ltd, by 28 February 2018, which would result in Danube holding a 50% interest in the Parta licence in Romania, and a 100% interest in a low-risk appraisal campaign within Parta. The investment comprised an initial 375,940 new shares to be issued upon completion of the transaction at £1.00 per share This will be followed by a further 1,127,819 new shares to be issued upon submission of an Authorisation for Expenditure for the first appraisal well at £1.00 per share. On 19 February 2018, the Company agreed to extend the date for completion of the transaction to 31 March 2018, with completion taking place on 23 March 2018.

 

 

 

 

17.        Financial risk management
 

The Company's operations expose it to a limited level of credit, foreign currency and liquidity risk. There is not any financial risk arising from the effects of changes in market prices of commodities based on its current activities.

The Company does not use derivative financial instruments to manage interest rate costs, and no hedge accounting is thus applied. Given the size of the Company, the Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board.

Credit risk

The Company's credit risk is primarily attributable to its trade receivables and cash balances. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

Price risk

Price risk arises from uncertainty about the future prices of financial instruments held within the Company's portfolio. It represents the potential loss that the Company might suffer through holding market positions in the face of market movements. The investments in equity and fixed interest stocks of unlisted companies are not traded and as such the prices are more uncertain than those of more widely traded securities. The Board's strategy in managing the market price risk inherent in the Company's portfolio of equity investments is determined by the requirement to meet the Company's investment objective. The Directors manage these risks by regular reviews of the portfolio within the context of current market conditions. Unlisted investments are valued as per accounting policy in these financial statements.

 

Liquidity risk

The Company actively maintains a treasury system that maintains a net credit position and is designed to ensure the Company have sufficient available funds for operations and planned expansions.

 

Maturity of financial liabilities

The following table shows details the Company's remaining contractual maturity for its non-derivative financial liabilities. The maturity of the financial liabilities table has been drawn up based on the undisclosed cash flows based on the earliest date on which the Company can be required to pay.

	2017	2016
	£'000	£'000
Within one year	65	32

Interest rate risk

The Company's exposure to changes in interest rate risk relates primarily to interest-earning financial assets and interest-bearing financial liabilities. Interest rate risk is managed by the Company on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by an adverse movement in interest rates.

Foreign currency risk

The Company incurs foreign currency risk on investments that are denominated in currencies other than Sterling. At present, the Company does not have any formal policy for hedging against exchange exposure. The Company may, when necessary, enter into foreign currency forward contracts to hedge against exposure from foreign currencies fluctuations. As at both 31 December 2017 and 31 December 2016 the Company has an investment denominated in Canadian Dollar. Any movement in the Canadian Dollar against Sterling will create a fair value gain or loss. The Company has assessed the impact of changes in exchange rates as not being significant to the Company.

Capital risk management

The Directors consider the Company's capital to comprise of share capital and reserves stated on the statement of financial position. The Company manages its capital to ensure the Company will be able to continue on a going concern on a long term basis while ensuring the optimal return to shareholders and other stakeholders through an effective debt and equity balance. No changes were made in the objectives, policies and processes during the current or previous year.

The share capital, including share premium, and reserves totalling £5,732,000 (2016: £509,000) provides the majority of the working capital required by the Company. The Management reviews the capital structure and makes adjustment to it in the light of changes in economic conditions. 

Other financial assets and liabilities

The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents and trade and other payables) are assumed to approximate their fair value.

 

 

Categories of financial instruments

 

	2017	2016
	£'000	£'000
Financial assets:
Cash and cash equivalents	5,307	340
Receivables	-	1
Available for sale investments	550	200
Total financial assets	541	541
Financial liabilities:
Other financial liabilities	65	32
Total financial liabilities	65	32

 

 

18.        Post balance sheet events

 

On 1 March 2018, the Company announced it had signed two subscription agreements with Corallian.  The first agreement was an unconditional subscription for £500,000 of new Corallian shares completed in February 2018 .  The second agreement gave Reabold the option to subscribe for an additional £500,000 of new Corallian shares at any point up to 6 April 2018, which was completed prior to the expiry date.

 

On 19 March 2018, the Company announced the completion of a fund raising of 1,291,750,000 new ordinary shares at a price of 0.6 pence per share, raising £7.75 million (before expenses) to support the Company's investment policy.

 

On 14 March 2018, the Company announced the granting of 125,000,000 options of which 45,000,000 million have an exercise price of 0.60p and vest immediately, 40,000,000 have an exercise price of 0.90p and vest 12 months from grant; and 40,000,000  have a exercise price of 1.2p and vest 18 months from grant.

 

On 28 March 2018, the Company announced the completion of the first tranche of the investment in Danube, with Reabold receiving an in initial 375,940 new shares in Danube on payment of the consideration of £375,940.

 

On 30 May 2018, the Company announced the completion of the final tranche of its investment in Corallian for £1,000,000, as per the announcement on 1 November 2017. Including the £1,500,000 already invested as per the announcements on 1 March 2018 and 1 November 2017, Reabold has invested £2,500,000 in Corallian and owns 32.9% of Corallian's issued share capital.

 

On 14 June 2018, the Company announced the acquisition of 100% of the issued share capital of Gaelic for the issue of 420 million new ordinary shares, representing £3,045,000 at the closing price of 0.725p per share on AIM on 12 June 2018 ("Acquisition"). The Acquisition is subject to shareholder approvals at the General Meeting of the Company to be held on 29 June 2018.  Gaelic has the right to earn-in to 50% of multiple near-term, high-impact oil and gas leases in California, United States by drilling up to five wells by the end of 2019. Further information in respect to the Acquisition is outlined in the Chairman's Statement. 

 

 

19.        Ultimate controlling party

 

In the opinion of the directors there is no controlling party.