5 Sep 2013 07:00
Cluff Natural Resources plc / Index: AIM / Epic: CLNR / Sector: Natural Resources
5 September 2013
Cluff Natural Resources plc ('CNR' or 'the Company')
Interim Results
Cluff Natural Resources plc, a company founded by natural resources entrepeneur Algy Cluff, is pleased to announce its interim results for the six months period to 30 June 2013.
Highlights
· Focus on Deep Underground Coal Gasification ('Deep UCG') to unlock energy in the UK by converting untapped coal into syngas
· Critical mass achieved with award of five offshore UK Deep UCG licences since January 2013 totaling 30,881 hectares
· Additional licences currently being assessed to add to existing portfolio
· Processes now underway to advance the licences - applications for relevant planning and environmental permits proceeding in order to develop the projects
· Seeking to address the UK's future energy deficit and create significant value for shareholders in the process
Chairman and Chief Executive's Statement
Since our last financial statement we have continued to focus our efforts on Deep Underground Coal Gasification (Deep UCG), which we judge to be a new alternative form of energy for the UK with potentially profound implications for stakeholders and for the United Kingdom as a whole. UCG is a process proven onshore in a number of countries such as Australia, South Africa, China, Canada and America, and Deep UCG offshore arguably could lead to the gasification of much of the billions of tonnes of untapped coal surrounding the UK's coastline which the UK still has in abundance but is unable to exploit economically by conventional coal mining. In anticipation of the evolution of this alternative energy process, your Company has largely been concerned, since I last reported to you, in securing the rights to what we deem to be the more prospective licences for Deep UCG offshore the UK. Since January 2013 we have been awarded five licences in England, Scotland and Wales by The Department for Energy and Climate Change and by The Coal Authority. The licence areas include Kincardine and Largo Bay in the Firth of Forth in Scotland; the Loughor Estuary in Carmarthenshire in Wales; the Dee Estuary in Merseyside and North Wales; and Whitehaven in North Cumbria which total an area of 30,881 hectares.
We are currently focussed on advancing these five licences through the various planning procedures, so that we can then proceed with feasibility studies and ultimately on to the drilling stage. At the same time we are continuing to build up our bank of licences in the UK where we have further licence applications pending on priority ground.
Your Company is the only British listed company specialising in Deep UCG and is focussed on utilising the UK's vast coal resources in an efficient and environmentally friendly manner. The coal gasification process involves injecting oxygen and steam into the coal seams variously between 500 meters and 1,200 meters below surface. The gas produced by the process can then be used by power stations. No coal is brought to the surface in the process and the gas can be processed to remove its CO2 content, resulting in a clean and convenient source of energy with minimal green house gas emissions.
In view of the current controversy surrounding the fracking methodology, I take this opportunity to clarify the fact that there is no similarity between the two activities. Deep UCG involves no chemicals and no pressure drilling. It is also a simpler, safer, cleaner and more versatile resource extraction method than conventional coal mining and surface gasification. Additionally, we plan to conduct the process largely offshore using the oil drilling technology that has transformed the US energy sector and is accordingly a simple transition from conventional North Sea oil and gas exploration which has operated successfully for fifty years. It is indeed both challenging and exciting to be in the vanguard of this new opportunity to provide security for Britain's perilous energy future.
Financial Review
In the six months to 30 June 2013 the Company incurred expenditure in the assessment and appraisal of various licence areas in addition to ongoing administrative expenditure resulting in a loss for the period of £853,156.
Cash used in operations totalled £796,027 and cash at 30 June 2013 was £1.8m.
Following the period end, 1,333,333 ordinary shares were issued. Consequently, the enlarged issued share capital of the Company currently stands at 88,333,333.
Directors' Dealing
During the 6 months to 30 June 2013 the following shares were acquired by Directors and senior management:
Number of shares
J G Cluff 668,757
B A FitzGerald 200,000
Earl De La Warr 800,000
G C Swindells 88,112
Corporate Review
During the period I am pleased to report that we appointed a Chief Financial Officer, Graham Swindells and we are presently seeking a Chief Operating Officer as we set out to advance our Deep UCG licences in the UK through the planning phase through to drilling.
Outlook
The UK has become one of the most gas dependent countries in the world and estimates predict that we will need to import 80% of our gas by 2020 to generate over 70% of all our electricity. This future energy deficit is something that I believe as a country we have a duty to address and I believe that unlocking the vast energy potential in untapped UK coal could provide the answer. An estimated 75% of Britain's coal reserves are still underground and your Company intends to convert this otherwise un-mineable coal into a clean energy in an environmentally friendly and relatively low-cost process, i.e. Deep UCG. We look forward to commencing our development programme in order to unlock this much needed energy in the UK whilst simultaneously creating significant value for shareholders.
J G Cluff
Chairman and Chief Executive
UNAUDITED INCOME STATEMENT
Period ended 30 June 2013
Note | Period ended 30 June 2013 | Period from 21 February - 30 June 2012 | Year ended 31 December 2012 | |||||
Unaudited | Unaudited | Audited | ||||||
£ | £ | £ | ||||||
Administrative expenses | (853,977) | (267,450) | (822,578) | |||||
Operating loss | (853,977) | (267,450) | (822,578) | |||||
Finance income | 821 | - | 848 | |||||
Loss on ordinary activities before taxation | (853,156) | (267,450) | (821,730) | |||||
Tax on loss on ordinary activities | - | - | - | |||||
Loss for the financial period | (853,156) | (267,450) | (821,730) | |||||
Loss per ordinary share (pence) - From continuing operations: basic and diluted | 3 | (0.98)p | (0.89)p | (1.29)p | ||||
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
Period ended 30 June 2013
Note | Period ended 30 June 2013 | Period from 21 February - 30 June 2012 | Year ended 31 December 2012 | |||||
Unaudited | Unaudited | Audited | ||||||
£ | £ | £ | ||||||
Loss for the period | (853,156) | (267,450) | (821,730) | |||||
Total comprehensive income for the period | (853,156) | (267,450) | (821,730) |
UNAUDITED BALANCE SHEET
At 30 JUNE 2013
Note | 30 June 2013 | 30 June 2012 | 31 December 2012 | ||||
Unaudited | Unaudited | Audited | |||||
£ | £ | £ | |||||
NON-CURRENT ASSETS | |||||||
Intangible Assets | 12,937 | - | 5,750 | ||||
Property, Plant and Equipment | 17,576 | 13,921 | 19,200 | ||||
Other receivables | 53,688 | - | 53,688 | ||||
84,201 | 13,921 | 78,638 | |||||
CURRENT ASSETS | |||||||
Trade and other receivables | 272,862 | 56,690 | 295,637 | ||||
Cash and cash equivalents | 1,797,286 | 3,161,050 | 2,602,127 | ||||
2,070,148 | 3,217,740 | 2,897,764 | |||||
TOTAL ASSETS | 2,154,349 | 3,231,661 | 2,976,402 | ||||
EQUITY ATTRIBUTABLE TO EQUITY | |||||||
HOLDERS OF THE COMPANY | |||||||
Share capital | 4 | 435,000 | 435,000 | 435,000 | |||
Share premium account | 2,867,376 | 2,789,100 | 2,867,376 | ||||
Share-based payment reserve | 201,074 | - | 90,749 | ||||
Warrant reserve | 232,195 | 208,282 | 232,195 | ||||
Retained deficit | (1,674,886) | (267,450) | (821,730) | ||||
TOTAL EQUITY | 2,060,759 | 3,164,932 | 2,803,590 | ||||
CURRENT LIABILITIES | |||||||
Trade and other payables | 93,590 | 66,729 | 172,812 | ||||
TOTAL LIABILITIES | 93,590 | 66,729 | 172,812 | ||||
TOTAL EQUITY AND LIABILITIES | 2,154,349 | 3,231,661 | 2,976,402 | ||||
UNAUDITED STATEMENT OF CHANGES IN EQUITY
Period ended 30 June 2013
Share capital |
Share premium | Warrant reserve | Share based payment reserve |
Retained deficit |
Total | |
£ | £ | £ | £ | £ | £ | |
For the period ended 30 June 2013 | ||||||
At 1 January 2013 | 435,000 | 2,867,376 | 232,195 | 90,749 | (821,730) | 2,803,590 |
Loss for the period | - | - | - | - | (853,156) | (853,156) |
Total comprehensive loss for the period | - | - | - | - | (853,156) | (853,156) |
Share-based payment | - | - | - | 110,325 | - | 110,325 |
At 30 June 2013 | 435,000 | 2,867,376 | 232,195 | 201,074 | (1,674,886) | 2,060,759 |
For the period ended 31 December 2012 | ||||||
At incorporation | - | - | - | - | - | - |
Loss for the period | - | - | - | - | (821,730) | (821,730) |
Total comprehensive loss for the period | - | - | - | - | (821,730) | (821,730) |
Issue of share capital and warrants | 435,000 | 3,232,805 | 232,195 | - | - | 3,900,000 |
Expense of issue | - | (365,429) | - | - | - | (365,429) |
Share-based payment | - | - | - | 90,749 | - | 90,749 |
At 31 December 2012 | 435,000 | 2,867,376 | 232,195 | 90,749 | (821,730) | 2,803,590 |
UNAUDITED STATEMENT OF CASH FLOWS
Period ended 30 June 2013
Period ended 30 June 2013 | Period from 21 February - 30 June 2012 | Year ended 31 December 2012 | ||||
Unaudited | Unaudited | Audited | ||||
£ | £ | £ | ||||
Cash flows from operating activities | ||||||
Loss before taxation | (853,156) | (267,450) | (821,730) | |||
Adjustments for: | ||||||
Investment income | (821) | - | - | |||
Depreciation | 2,500 | 776 | 2,299 | |||
Amortisation | 750 | - | - | |||
Share-based payments | 110,325 | 111,500 | 90,749 | |||
Directors' remuneration settled in shares | - | - | 66,665 | |||
(740,402) | (155,174) | (662,017) | ||||
Increase/(decrease) in trade and other receivables | 23,597 | (56,690) | (278,490) | |||
(Decrease)/increase in trade and other payables | (79,222) | 66,729 | 172,812 | |||
Net cash used in operating activities | (796,027) | (145,135) | (767,695) | |||
Cash flows from investing activities | ||||||
Purchase of intangible assets | (7,937) | - | (6,000) | |||
Purchase of property, plant and equipment | (877) | (14,697) | (21,249) | |||
(8,814) | (14,697) | (27,249) | ||||
Cash flows from financing activities | ||||||
Proceeds from share issue | - | 3,762,500 | 3,762,500 | |||
Expense of share issue | - | (441,618) | (365,429) | |||
- | 3,320,882 | 3,397,071 | ||||
Net (decrease) / increase in cash and cash equivalents | (804,841) | 3,161,050 | 2,602,127 | |||
Cash and cash equivalents at beginning of period | 2,602,127 | - | - | |||
Cash and cash equivalents at end of period | 1,797,286 | 3,161,050 | 2,602,127 | |||
Notes to the financial information
Period ended 30 June 2013
1. GENERAL
The interim financial information for the period to 30 June 2013 is unaudited and was approved by the Directors of the Company on 4 September 2013. The condensed financial information set out above does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The interim financial information is unaudited.
The Company's operations are not subject to seasonality or cyclicality.
No dividend has been declared or paid in this interim period.
2. ACCOUNTING POLICIES
The interim financial information in this report has been prepared on the basis of the accounting policies set out in the audited financial statements for the period ended 31 December 2012, which complied with International Financial Reporting Standards as adopted for use in the European Union ("IFRS").
IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an on-going process of review and endorsement by the European Commission.
The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at 31 December 2013, with the exception of IAS 34 Interim Financial Reporting.
The Directors have adopted the going concern basis in preparing the financial information. In assessing whether the going concern assumption is appropriate, the Directors have taken into account all relevant available information about the foreseeable future.
The condensed financial information for the period ended 31 December 2012 set out in this interim report does not comprise the Group's statutory accounts as defined in section 434 of the Companies Act 2006.
The statutory accounts for the period ended 31 December 2012, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditors reported on these accounts; their report was unqualified; did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006, and did not include reference to any matters to which the auditor drew attention by way of emphasis.
3. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.Given the Company's reported loss for the period, share options and warrants are not taken into account when determining the weighted average number of ordinary shares in issue during the year and therefore the basic and diluted loss per share are the same.
Basic and diluted loss per share
30 June 2013 | 30 June 2012 | 31 December 2012 | |||
Loss per share from continuing operations | (0.98)p | (0.89)p | (1.29)p | ||
The loss and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
30 June 2013 | 30 June 2012 | 31 December 2012 | |||
£ | £ | £ | |||
Loss used in the calculation of total basic and diluted earnings per share | (853,156) | (267,450) | (821,730) | ||
Number of shares
| 30 June 2013 | 30 June 2012 | 31 December 2012 | ||
Number | Number | Number | |||
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share | 87,000,000 | 30,100,839 | 63,549,547 | ||
If the Company's share options and warrants were taken into consideration in respect of the Company's weighted average number of ordinary shares for the purposes of diluted earnings per share, it would be as follows:
Number of shares | |||||
Potential dilutive effect of share options and warrants | 47,922,873 | 14,160,930 | 33,371,629 | ||
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 134,922,873 | 44,261,769 | 96,921,176 | ||
4. SHARE CAPITAL
a) Share Capital
The Company has one class of Ordinary share which carries no right to fixed income nor has any preferences or restrictions attached.
Issued and fully paid:
30 June 2013 | 30 June 2012 | 31 December 2012 | |||
£ | £ | £ | |||
87,000,000 Ordinary shares of £0.005 each | 435,000 | 435,000 | 435,000 |
5. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public free of charge from the Company at Cluff Natural Resources Plc, Third Floor, 5-8 The Sanctuary, London SW1P 3JS during normal office hours, Saturdays and Sundays excepted, for 14 days from today and are available on the website at www.cluffnaturalresources.com.