Adm Energy Regulatory News (ADME)

ADM Energy plc

+44 20 7786 3555

Richard Carter, Chairman

Cairn Financial Advisers LLP

+44 20 7213 0880

(Nominated Adviser)

Jo Turner, James Caithie

Pello Capital Limited

+44 20 3700 2500

(Broker)

Dan Gee

Luther Pendragon

+44 20 7618 9100 

(Financial PR)

Harry Chathli, Alexis Gore, Joe Quinlan

Reserves

2019

2019

2018

2018

Gross

Net entitlement

 to MXO

Gross

Net entitlement

 to MXO

MMboe

MMboe

MMboe

MMboe

1P Proven Reserves

82.4

5.2

78.2

5.0

2P Proven and Probable Reserves

138.2

8.9

127.1

8.2

3P Proven, Probable and Possible Reserves

220.8

12.8

215.0

12.7

2018

2017

Note

£'000

£'000

Continuing operations

Revenue

3

3,127

1,727

Operating costs

(2,356)

(2,565)

Administrative expenses

(1,620)

(1,495)

Operating loss

4

(849)

(2,333)

Other gains and losses

5

-

27

Finance costs

6

-

(1,129)

Loss on ordinary activities before taxation

(849)

(3,435)

Taxation

8

-

-

Loss for the year

(849)

(3,435)

Other Comprehensive income:

Exchange translation movement

404

(746)

Total comprehensive income for the year

(445)

(4,181)

Basic and diluted loss per share:

9

From continuing and total operations

(0.04)p

(0.24)p

GROUP

COMPANY

2018

2017

2018

2017

Notes

£'000

£'000

£'000

£'000

NON-CURRENT ASSETS

Intangible assets

10

16,362

14,984

-

-

Investment in subsidiaries

11

-

-

14,738

14,634

16,362

14,984

14,738

14,634

CURRENT ASSETS

Investments held for trading

12

200

179

200

179

Trade and other receivables

13

29

35

29

35

Cash and cash equivalents

14

216

50

216

50

445

264

445

264

CURRENT LIABILITIES

Trade and other payables

15

1,643

1,049

1,104

609

1,643

1,049

1,104

609

NET CURRENT LIABILITIES

(1,198)

(785)

(659)

(345)

NET ASSETS

15,164

14,199

14,079

14,289

EQUITY

Share capital

17

8,499

8,389

8,389

8,389

Share premium

17

32,833

31,533

31,533

31,533

Reserve for options granted

172

172

172

172

Reserve for warrants issued

783

783

783

783

Currency translation reserve

(342)

(746)

-

-

Retained deficit

(26,781)

(25,932)

(28,208)

(26,588)

Equity attributable to owners of the Company and total equity

15,164

14,199

14,079

14,289

Share

 capital

Share

premium

Loan note equity reserve

Reserve for options granted

Reserve for warrants issued

Exchange translation reserve

Retained deficit

Total

equity

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2017

8,336

25,460

-

172

783

-

(22,497)

12,254

Loss for the year

-

-

-

-

-

-

(3,435)

(3,435)

Exchange translation movement

-

-

-

-

-

(746)

-

(746)

Total comprehensive expense for the year

-

-

-

-

-

(746)

(3,435)

(4,181)

Issue of new shares

53

6,522

-

-

-

-

-

6,575

Share issue costs

-

(449)

-

-

-

-

-

(449)

At 31 December 2017

8,389

31,533

-

172

783

(746)

(25,932)

14,199

Loss for the year

-

-

-

-

-

-

(849)

(849)

Exchange translation movement

-

-

-

-

-

404

-

404

Total comprehensive expense for the year

-

-

-

-

-

404

(849)

(445)

Issue of new shares

110

1,390

-

-

-

-

-

1,500

Share issue costs

-

(90)

-

-

-

-

-

(90)

At 31 December 2018

8,499

32,833

-

172

783

(342)

(26,781)

15,164

Share

 capital

Share

premium

Loan note equity reserve

Reserve for options granted

Reserve for warrants issued

Retained deficit

Total

equity

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2017

8,336

25,460

-

172

783

(24,055)

10,696

Loss for the period and total comprehensive expense

-

-

-

-

-

(2,533)

(2,533)

Issue of new shares

53

6,522

-

-

-

-

6,575

Share issue costs

-

(449)

-

-

-

-

(449)

At 31 December 2017

8,389

31,533

-

172

783

(26,588)

14,289

Loss for the period and total comprehensive expense

-

-

-

-

-

(1,620)

(1,620)

Issue of new shares

110

1,390

-

-

-

-

1,500

Share issue costs

-

(90)

-

-

-

-

(90)

At 31 December 2018

8,499

32,833

-

172

783

(28,208)

14,079

GROUP

COMPANY

Note

2018

2017

2018

2017

£'000

£'000

£'000

£'000

OPERATING ACTIVITIES

Loss for the period

(849)

(3,435)

(1,620)

(2,533)

Adjustments for:

Loss/(gain) on disposal of investments

-

(7)

-

(7)

Finance costs

-

1,129

-

1,072

Foreign exchange adjustments

-

(35)

-

(35)

Operating cashflow before working capital changes

(849)

(2,348)

(1,620)

(1,503)

Decrease in receivables

6

164

6

31

Increase/(decrease) in trade and other payables

594

(1,072)

495

(30)

Net cash outflow from operating activities

(249)

(3,256)

(1,119)

(1,502)

INVESTMENT ACTIVITIES

Proceeds from disposal of investments

4

303

4

303

Purchase of investments held for trading

(25)

(475)

(25)

(475)

Development costs

(952)

(1,113)

-

-

Loans to subsidiary operation

-

-

(104)

(3,080)

Net cash outflow from investment activities

(973)

(1,285)

(125)

(3,252)

FINANCING ACTIVITIES

Continuing operations:

Issue of ordinary share capital

1,500

6,575

1,500

6,575

Share issue costs

(90)

(449)

(90)

(449)

Net proceeds from short term borrowings

-

1,710

-

1,710

Repayment of short term borrowings

-

(2,919)

-

(2,919)

Finance costs paid

-

(504)

-

(447)

Net cash inflow from financing activities

1,410

4,413

1,410

4,470

Net (decrease)/increase in cash and cash equivalents from continuing and total operations

188

(128)

166

(284)

Exchange translation difference

(22)

(156)

-

-

Cash and cash equivalents at beginning of period

50

334

50

334

Cash and cash equivalents at end of period

14

216

50

216

50

1

Notes to the financial statements

For the year ended 31 December 2018

general information

The Company is a public limited company incorporated in the United Kingdom and its shares are listed on the AIM market of the London Stock Exchange. The Company is an investment company, mainly investing in natural resources, minerals, metals, and oil and gas projects. The registered office of the Company is as detailed in the Company Information on page 2.

2

PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.

As in prior periods, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.

The current period covered by these financial statements is the year to 31 December 2018. The comparative figures relate to the year ended 31 December 2017. The financial statements are presented in pounds sterling (£) which is the functional currency of the Group.

An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and which have not been adopted early by the Group are presented below under 'Statement of Compliance'.

GOING CONCERN

At 31 December 2018, the Group recorded a loss for the year of £849,000 and had net current liabilities of £1,198,000, after allowing for cash balances of £216,000.

In addition, the Group received an advance of £650,000 in connection with performing appraisal activities of certain oil and gas licences in Grenada. No appraisal activities have been performed to date and the amount is repayable on demand.

In the short term the Group will require additional funding in order to meet its liabilities as they fall due.

The Directors have a reasonable expectation that the Group has the ability to raise the additional funds required in order to continue in operational existence for the foreseeable future and they therefore continue to adopt the going concern basis of accounting in preparing these Financial Statements.

However, given the uncertainty surrounding the ability and likely timing of securing such finance the Directors are of the opinion that a material uncertainty exists that may cast doubt on the Group's ability to continue as a going concern. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

2

1.1 

PRINCIPAL ACCOUNTING POLICIES (continued)

STATEMENT OF COMPLIANCE

The following standard is effective for the first time for the financial period beginning 1 January 2018 and is relevant to the Company's operations:

• IFRS 9, 'Financial Instruments'. The standard sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39, 'Financial Instruments: Recognition and Measurement.' The adoption of this standard has not had a significant effect on the Company's accounting policies related to financial assets and liabilities as majority are classified at fair value through profit or loss. The adoption of this standard did not require the restating of comparatives.

The following standards and amendments have been issued and are mandatory for accounting periods beginning on or after 1 January 2018 but are not relevant or have no material effect on the Company's operations or financial statements:

• IFRS 15, 'Revenue from Contracts with Customers'. This standard establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18, 'Revenue', IAS 11, 'Construction Contracts' and related interpretations.

• Amendments to IFRS 15 Clarifications to IFRS 15 Revenue from Contracts with Customers

• Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2

• Transfers of Investment Property - Amendments to IAS 40

• IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration

• Annual Improvements to IFRSs - 2014-2016 Cycle: IFRS 1 First-time Adoption of International Financial Reporting Standards - Deletion of short-term exemptions for first-time adopters

• Annual Improvements to IFRSs - 2014-2016 Cycle: IAS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment - by - investment choice

• Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts - Amendments to IFRS 4

Other standards in issue, but not yet effective, are not expected to have a material effect on the financial statements of the Company in future periods and have not been disclosed.

KEY ESTIMATES AND ASSUMPTIONS

Estimates and assumptions used in preparing the financial statements are reviewed on an ongoing basis and are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these estimates and assumptions form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

AVAILABLE FOR SALE INVESTMENTS

Note 10 summarises the Group's indirect investment in the Aje Field. The Directors have reviewed the value of the Group's investment and consider that the fair value of this investment should be stated at the original cost of the investment plus the value of the cash calls that the Group has paid and is liable for as at the year-end, which the Directors consider represents the fair value of the Group's interest.

SHARE BASED PAYMENTS

The Group has made awards of options and warrants over its unissued share capital to certain Directors, employees and professional advisers as part of their remuneration.

The fair value of options is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. In accordance with IFRS 2 'Share Based Payments', the Group has recognised the fair value of options, calculated using the Black-Scholes option pricing model. The Directors have made assumptions particularly regarding the volatility of the share price at the grant date in order to reach a fair value. Further information is disclosed in Note 18.

2

PRINCIPAL ACCOUNTING POLICIES (continued)

SALES REVENUE

Sales of petroleum production are recognised when goods are delivered or the title has passed to the customer.

TAXATION

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the statement of financial position date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the statement of financial position date.

Most changes in deferred tax assets or liabilities are recognized as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.

EXPLORATION, EVALUATION and DEVELOPMENT COSTS

Exploration, evaluation and development costs relate to expenditure incurred on the development and evaluation of mineral resources. These costs are recorded as intangible assets until the mineral resource reaches the production stage. Upon completion of development and commencement of production, capitalised development costs as well as evaluation expenditures are fair valued on a net present value basis.

Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:

· completion of the intangible asset is technically feasible so that it will be available for use or sale

· the Group intends to complete the intangible asset and use or sell it

· the Group has the ability to use or sell the intangible asset

· the intangible asset will generate probable future economic benefits

· there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and

· the expenditure attributable to the intangible asset during its development can be measured reliably.

Other development expenditure that does not meet these criteria is recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

PRINCIPAL ACCOUNTING POLICIES (continued)

FINANCIAL ASSETS

Financial assets are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

The Group's financial assets are classified into the following specific categories: 'investments held for trading', and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

All Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

INVESTMENTS HELD FOR TRADING

All investments determined upon initial recognition as held at fair value through profit or loss were designated as investments held for trading. Investment transactions are accounted for on a trade date basis. Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction cost. The fair value of the financial instruments in the statement of financial position is based on the quoted bid price at the statement of financial position date, with no deduction for any estimated future selling cost. Unquoted investments are valued by the directors using primary valuation techniques such as recent transactions, last price and net asset value. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the consolidated statement of comprehensive income as "Net gains on investments". Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

BASIS OF CONSOLIDATION

The consolidated financial statements present the results of ADM Energy plc and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Income Statement

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

EQUITY

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

Equity comprises the following:

· Share capital represents the nominal value of equity shares issued.

· The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

· Option reserve represents the cumulative cost of share based payments in respect of options granted.

· Warrant reserve represents the cumulative cost of share based payments in respect of warrants issued.

· Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.

2

PRINCIPAL ACCOUNTING POLICIES (continued)

FINANCIAL LIABILITIES

Financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method.

The Group's financial liabilities comprise trade and other payables.

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.

SHARE BASED PAYMENTS

Where share options are awarded, or warrants issued to employees, the fair value of the options/warrants at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options/warrants that eventually vest. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where warrants or options are issued for services provided to the Group, the fair value of the service is charged to the statement of comprehensive income or against share premium where the warrants or options were issued in exchange for services in connection with share issues. Where the fair value of the services cannot be reliably measured, the service is valued using Black Scholes valuation methodology taking into consideration the market and non-market conditions described above.

Where the share options are cancelled before they vest, the remaining unvested fair value is immediately charged to the statement of comprehensive income.

FOREIGN CURRENCIES

The Directors consider Sterling to be the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Sterling, which is the Group's functional and presentation currency.

Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of the transactions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income statement. Non-monetary items that are measured at historical costs in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into the functional currency using the exchange rates at the date when the fair value was determined.

SEGMENTAL REPORTING

A segment is a distinguishable component of the Group's activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

As the chief operating decision maker reviews financial information for and makes decisions about the Group's investment activities as a whole, the directors have identified a single operating segment, that of holding and trading in investments in natural resources, minerals, metals, and oil and gas projects. The Directors consider that it would not be appropriate to disclose any geographical analysis of the Group's investments.

No segmental analysis has been provided in the financial statements as the Directors consider that the Group's operations comprise one segment.

3

REVENUE

All the Group's revenue is derived from its operations in Nigeria.

4

OPERATING LOSS

2018

2017

£'000

£'000

Loss from continuing operations is arrived at after charging:

Directors' remuneration

798

650

Employee salaries and other benefits

44

36

Auditors' remuneration:

fees payable to the principal auditor for the audit of the Group's financial statements

24

18

5

OTHER GAINS AND LOSSES

2018

2017

£'000

£'000

Gain/(loss) on disposal of investments

-

7

Refund of FX margin deposit previously written off

-

20

-

27

6

FINANCE COSTS

2018

2017

£'000

£'000

Interest on convertible loan stock

-

-

Finance costs of other loan facilities

-

1,072

Interest on overdue cash calls

-

57

-

1,129

7

EMPLOYEE REMUNERATION

The expense recognised for employee benefits for continuing operations is analysed below:

2018

2017

£'000

£'000

Wages and salaries (including directors)

766

626

Social security costs

76

60

842

686

Directors' remuneration:

Wages and salaries (including employee benefits)

726

593

Social security costs

72

57

798

650

8

INCOME TAX EXPENSE

2018

2017

£'000

£'000

Current tax - continuing operations

-

-

2018

2017

£'000

£'000

Loss before tax from continuing operations

(849)

(3,435)

Loss before tax multiplied by rate of corporation tax in the UK of 19% (2017: 19.25%)

(161)

(661)

Expenses not deductible for tax purposes

6

21

Unrelieved tax losses carried forward

155

640

Total tax charge for the year

-

-

There are unrelieved tax losses of approximately £20,400,000 (2017: £16,900,000) which may be available to offset against future taxable profits. No deferred tax asset has been recognised in respect of the losses as recoverability is uncertain.

9

EARNINGS PER SHARE

The basic and diluted earnings per share is calculated by dividing the loss attributable to owners of the Group by the weighted average number of ordinary shares in issue during the year.

2018

2017

£'000

£'000

Loss attributable to owners of the Group

- Continuing operations

(849)

(3,435)

Continuing and discontinued operations

(849)

(3,435)

2018

2017

Weighted average number of shares for calculating basic and fully diluted earnings per share

1,949,157,883

1,439,477,518

2018

2017

pence

pence

Earnings per share:

Loss per share from continuing and total operations

(0.04)

(0.24)

10

INTANGIBLE ASSET

GROUP

The intangible asset relates to the acquisition of a 5% revenue interest in the OML 113 licence, which includes the Aje Field ("Aje") and the further costs of bringing the Aje 4 and Aje 5 wells into production.

2018

2017

£'000

£'000

Cost of investment in Jacka Resources Nigeria Holdings Limited

14,984

14,461

Cash calls in respect of Aje 4 and Aje 5 wells

952

1,113

Foreign currency exchange translation difference

426

(590)

16,362

14,984

11

INVESTMENT IN SUBSIDIARIES

On 10 August 2016, the Group completed the agreement for the acquisition of Jacka Resources Nigeria Holdings Limited ("JRNH"), a BVI registered company, in which Jack Resources Limited ("JRL") held the single issued share. JRNH's sole asset is its wholly owned subsidiary, P R Oil & Gas Nigeria Limited ("PROG"), a Nigerian registered company. PROG has a 5% revenue interest in the OML 113 licence, offshore Nigeria, which includes the Aje Field ("Aje"), where oil production commenced in May 2016.

2018

2017

£'000

£'000

Balance at beginning of period

14,634

11,554

Advances to PROG

104

3,080

Balance at end of period

14,738

14,634

The Group's subsidiary companies are as follows:

Name

Principal activity

Country of incorporation

 and principal

place of business

Proportion of

ownership interest

 and voting rights

held by the Group

Jacka Resources Nigeria Holdings Limited

Holding company

British Virgin Islands

100%

Maples Corporate Services (BVI) Ltd

Kingston Chambers

P.O. Box 173, Road Town, Tortola

*P R Oil & Gas Nigeria Limited

Oil exploration & production

Nigeria

100%

1, Murtala Muhammed Drive

Ikoyi, Lagos

Geo Estratos MXOil, SAPI de CV

Oil exploration

Mexico

100%

Lago Alberto 319, Piso 6

IZA Punto Polanco

Col. Granada, Del. Miguel Hidalgo

CP 11520, Ciudad de Mexico

12

INVESTMENTS HELD FOR TRADING

The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows (see note 19)

The investments held by the Group are designated as at fair value through profit or loss.

GROUP AND COMPANY

2018

2017

£'000

£'000

Fair value of investments brought forward

179

-

Purchases of investments

25

475

Proceeds from the disposal of investments

(4)

(303)

(Loss)/gain on disposal of investments

-

7

Movement in fair value of investments held at year end

-

-

Fair value of investments held for trading

200

179

Investments held at the year end were categorised as follows

Level 1

-

4

Level 3

200

175

200

179

The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the company are explained in the accounting policy note, "Investments held for trading".

There were no transfers between Level 1 and Level 3 investments during the year.

13

TRADE AND OTHER RECEIVABLES

GROUP

COMPANY

2018

2017

2018

2017

£'000

£'000

£'000

£'000

Trade receivables

-

-

-

-

Other receivables

13

13

13

13

Prepayments and accrued income

16

22

16

22

29

35

29

35

14

CASH AND CASH EQUIVALENTS

GROUP AND COMPANY

2018

2017

£'000

£'000

Cash at bank

216

50

Cash and cash equivalents

216

50

15

TRADE AND OTHER PAYABLES

GROUP

COMPANY

2018

2017

2018

2017

£'000

£'000

£'000

£'000

Trade payables

52

91

52

91

Tax and social security

24

66

24

66

Other payables

843

824

316

394

Accruals and deferred income

724

68

712

58

1,643

1,049

1,104

609

16

BORROWINGS

GROUP AND COMPANY

2018

2017

£'000

£'000

As at 1 January

-

584

Net proceeds of loans

-

1,710

Arrangement fees

-

90

Other finance charges

-

982

Exchange difference

-

-

-

3,366

Settled by cash

-

(1,791)

Settled by the issue of shares

-

(1,575)

As at 31 December

-

-

17

CALLED UP SHARE CAPITAL

Number of

ordinary shares

Value

£'000

Number of

deferred shares

Value

£'000

Total

 value

£'000

Share Premium

£'000

Issued and fully paid

At 1 January 2017 (ordinary shares of 0.01p)

1,141,141,331

114

8,222,439,370

8,222

8,336

25,460

Shares issued (see note below)

530,208,333

53

-

-

53

6,522

Share issue costs

-

-

-

-

-

(449)

At 31 December 2017

1,671,349,664

167

8,222,439,370

8,222

8,389

31,533

Shares issued (see note below)

1,100,000,000

110

-

-

110

1,390

Share issue costs

-

-

-

-

-

(90)

At 31 December 2018

2,771,349,664

277

8,222,439,370

8,222

8,499

32,833

The deferred shares have restricted rights such that they have no economic value.

Share issues in year

On 20 February 2018, 100,000,000 new ordinary shares of 0.01p were issued at 0.5p each as a result of a placing, raising £500,000 before expenses.

On 22 October 2018, 1,000,000,000 new ordinary shares of 0.01p were issued at 0.1p each as a result of a placing, raising £1,000,000 before expenses.

Outstanding at 1 January

90,782,667

1.23

140,032,667

1.15

Issued

-

-

-

-

Exercised

-

-

-

-

Lapsed

4,116,000

-

(49,250,000)

1.00

Outstanding at 31 December

86,666,667

1.23

90,782,667

1.23

19

RISK MANAGEMENT OBJECTIVES AND POLICIES

CAPITAL RISK MANAGEMENT

The Group's objectives when managing capital are:

· to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

· to support the Group's growth; and

· to provide capital for the purpose of strengthening the Group's risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The Group's risk management is coordinated by the board of directors, and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets.

Management review the Group's exposure to currency risk, interest rate risk, liquidity risk on a regular basis and consider that through this review they manage the exposure of the Group on a near term needs basis

There is no material difference between the book value and fair value of the Group's cash.

MARKET PRICE RISK

The Group's exposure to market price risk mainly arises from potential movements in the fair value of its investments. The Group manages this price risk within its long-term investment strategy to manage a diversified exposure to the market. If each of the Group's equity investments were to experience a rise or fall of 10% in their fair value, this would result in the Group's net asset value and statement of comprehensive income increasing or decreasing by £20,000 (2017: £4,000).

INTEREST RATE RISK

The Group and Company manage the interest rate risk associated with the Group's cash assets by ensuring that interest rates are as favourable as possible, whilst managing the access the Group requires to the funds for working capital purposes.

The Group's cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.

CREDIT RISK

The Group's financial instruments, which are exposed to credit risk, are considered to be mainly loans and receivables, and cash and cash equivalents. The credit risk for cash and cash equivalents is not considered material since the counterparties are reputable banks. The maximum exposure to credit risk for loans and receivables is as set out in the table below, and relates to the financing of the Group's joint venture interests.

The Group's exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet date, as summarised below:

2018

£'000

2017

£'000

Cash and cash equivalents

216

50

Loans and receivables

13

13

229

63

LIQUIDITY RISK

Liquidity risk is managed by means of ensuring sufficient cash and cash equivalents are held to meet the Group's payment obligations arising from administrative expenses. The cash and cash equivalents are invested such that the maximum available interest rate is achieved with minimal risk.

20

FINANCIAL INSTRUMENTS

The Group uses financial instruments, other than derivatives, comprising cash to provide funding for the Group's operations.

CATEGORIES OF FINANCIAL INSTRUMENTS

The IFRS 9 categories of financial asset included in the statement of financial position and the headings in which they are included are as follows:

2018

2017

£'000

£'000

FINANCIAL ASSETS:

Cash and cash equivalents

216

50

Investments held for trading (see fair value measurements below)

200

179

Loans and receivables

13

13

Investments available for sale

14,738

14,634

FINANCIAL ASSETS BY IFRS 7 FAIR VALUE HIERARCHY

Level 1 - Investments held for trading

-

4

Level 3 - Loans and receivables

13

13

Investments held for trading

200

175

Investments available for sale

14,738

14,634

14,951

14,822

FAIR VALUE MEASUREMENTS

The Group holds quoted investments that are measured at fair value at the end of each reporting period using the IFRS 7 fair value hierarchy as set out below.

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the Group are explained in the accounting policy note, "Investments held for trading".

20

FINANCIAL INSTRUMENTS continued

FINANCIAL LIABILITIES AT AMORTISED COST:

The IFRS 9 categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:

2018

2017

£'000

£'000

Trade and other payables

919

981

Borrowings

-

-

The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest repayment date on which the Group can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from the interest rate curves at the balance sheet date. The contractual maturity is based on the earliest date on which the Group may be required to pay.

Less than

1 month

1-3

months

3 months

to 1 year

1-5

years

Over 5

 years

£'000

£'000

£'000

£'000

£'000

2018

Interest bearing:

Borrowings

-

-

-

-

-

Non-interest bearing:

Trade and other payables

-

919

-

-

-

2017

Interest bearing:

Borrowings

-

-

-

-

-

Non-interest bearing:

Trade and other payables

-

981

-

-

-

21

Contingent LIABILITIES

There were no contingent liabilities as at 31 December 2018 (2017: £Nil)

22

RELATED PARTY TRANSACTIONS

The remuneration of the Directors, who are key management personnel of the Group, is set out in the report on Directors' Remuneration.

During the year, £30,000 of Nicholas Lee's total remuneration was invoiced by ACL Capital Limited, a company controlled by him. This amount was settled by the issue of shares.

During the year, the remuneration for Richard Carter of £74,000 was invoiced by Bryant Park Consulting Ltd, a company controlled by him. £12,000 of this amount was settled by the issue of shares.

23

ULTIMATE CONTROLLING PARTY

The Directors do not consider there to be a single ultimate controlling party.

24

POST PERIOD END EVENTS

Events since the year end are detailed in the Report of the Directors.