SER.L Regulatory News (SER)

30 June 2015

Sefton Resources, Inc.

("Sefton" or the "Company")

Final Results for the 13 Months to 31 January 2015

The board of directors of Sefton (the "Board") is pleased to announce the Company's financial results for the thirteen-month period ended 31 January 2015.

Period & Post-Period Highlights:

· Successful Sale of TEG USA to Hawker Energy LLC

· Successful release from $4m contingent liability to Bank of the West

· Major corporate restructuring and significant reduction of Company overheads

· Relocation of the administrative office to the UK

· A recent successful equity placing raising £799,500 in June 2015

· Provisional sale of Sefton's Kansas assets for US$400,000 agreed

· Development agreement signed with UTAS Petroleum

· Experienced CEO identified pursuant to finalisation of identified acquisition

Reflecting on the progress to date, Raylene Whitford, CFO of Sefton, commented:

"The prior year brought a significant change for the Company, not least through the sale of the Company's largest asset to Hawker Energy LLC, the lifting of the Company's co-borrower status on the outstanding loan with the Bank of the West and the closure of its administrative office in Denver and relocation to the UK. A key element of Company's sustainability was a major internal restructuring to reduce overheads to a minimum to ensure cost effective operations.

Cash conservation continues to be of high importance for the Company and its shareholders, as is the identification of opportunities to acquire a robust asset portfolio outside of the US. The Board has made significant progress in this regard and has identified producing assets in Indonesia, which we believe we are well placed to investigate further through the establishment of a Development Agreement with UTAS Petroleum.

Whilst we acknowledge that near-term challenges remain on the forefront as we seek to stabilise and refocus the Company, the Board has made clear progress in the last few months and we have a distinct strategy to grow the Company in order to generate long term value for our shareholders."

The Company's annual report and audited accounts for the 13 months ending 31 January 2015 have been published on the Company's website, www.seftonresources.com, in accordance with the Company's articles of association and AIM Rule 20, and are available to shareholders.

Visit www.seftonresources.com or contact:

Directors' Statement for Sefton Resources, Inc ('The Company') and its subsidiaries ('the Group')

The prior year brought a significant amount of the change for the Company, not least through sale of the Company's largest asset to Hawker Energy LLC, the lifting of the Company's status as a co-borrower on a loan with the Bank of the West, the closure of its US office in Denver and relocation to the UK, and a major internal restructuring to reduce overheads to a minimum. Cash conservation continues to be of high importance for the group, as is the identification of opportunities to acquire assets outside of the US.

Sale of TEG USA, TEG MidContinent and TEG Transmission

Following a considerable period of discussion and negotiations, the sale of the Company's largest asset, TEG USA, signalled the beginning of the Company's execution of its strategy to divest from the US.

The consideration for the transaction consisted of 3,000,000 common shares of Hawker (current mid price $0.0625, giving a value of $187,500), subject to a six month lock in from date of issue and 5,000,000 share purchase warrants to acquire common shares of Hawker at a strike price of $0.25 per share for 5 years. As part of the sale, the pension liabilities and Asset Retirement Obligation costs for the subsidiary were also transferred to the seller.

On 20 March 2015, the Company announced it had successfully negotiated the release of its status as a co-borrower on the $4 million outstanding loan with the Bank of the West. The loan was secured against the assets of TEG MidContinent as well as Sefton, and as part of the release, 1,500,000 shares were returned to Hawker and the 5,000,000 share purchase warrants were cancelled. As such, this amount was written down as part of the sale consideration for TEG USA.

On 31 January 2015, the Company received a Letter of Intent from a Canadian operator to purchase Sefton's TEG MidContinent and TEG Transmission companies for $400,000 cash, however the operator could not raise the funds to proceed with the transaction. In May 2015, the Company received a notification of interest from another unrelated third party to do the transaction on the same terms and therefore engaged the Directors in negotiations regarding the potential sale of these assets.

On 29 June 2015, the Company signed a Sale and Purchase Agreement for the assets and liabilities of TEG MidContinent and TEG Transmission on 29 June 2015. The book value of the relevant assets have been written down to reflect this amount.

Potential Litigation

On 14 May 2015, a claim was filed in the district court of Denver by the former Chairman, James Ellerton against Sefton, two of its directors, and a former director which outlined unspecified damages in connection with his resignation from the board and the termination of the consulting contract with C&J Resources, Inc.

This matter remains unsettled as at the date of the release of these accounts, however the Board has received a firm US legal opinion that Mr Ellerton's claims are without merit. Furthermore, the Company has a suite of counterclaims which it is prepared to file against Mr Ellerton and C&J Resources in relation to the activities he performed whilst a Director. Some of these claims were filed when the Company and Mr Ellerton were in arbitration in 2014. The arbitration was subsequently dropped by Mr Ellerton in late 2014.

On 11 June 2015 the matter was removed from the district courts of Denver to the federal court of Colorado. The preliminary hearing date for the case was set for 31 August 2015 as of the date of the publishing of these accounts.

Change of Accounting Reference Date

The Director's approved a change of the accounting reference date to 31 January 2015 to take into account the sale of the Company's largest subsidiary, TEG USA, as well as Letters of Intent received to purchase subsidiaries TEG MidContinent and TEG Transmission. Per the Company's strategy update released via RNS on the 2nd and 24th of February, the Company's new strategy was to exit the US, therefore it was deemed appropriate and prudent to recognise the remaining assets as held for sale as at the balance sheet date.

Future Strategy and Next Steps

The Directors of Sefton are focused on identifying new acquisition targets and have identified South East Asia as an area with potential value. Opportunities to acquire existing producing assets, exploration and development opportunities are currently being assessed.

Thorough due diligence is being undertaken on a number of opportunities in the region and the Company has identified a balanced portfolio of onshore exploration, development and producing assets in Indonesia. These assets are currently producing c.250 boepd, and the Board believes that they have the potential to produce up to 1,000 boepd within 12 months if developed appropriately. In order to pursue this opportunity further, the Company entered into an unincorporated joint venture with UTAS Petroleum on 25 June 2015.

Management

The Board currently consists of one UK, one Canadian and one Indonesian Non-Executive Director, each of whom are highly involved in the day-to-day operations of the Company. The Board also currently has one Executive Director who is also the Company Secretary.

Directors' terms expire at the Annual General Meeting of Shareholders ("AGM"), such that Tom Milne will leave the board in 2015. Keith Morris is due to step down from the Board in 2016.

The Company has identified a suitable CEO candidate with considerable small cap oil and gas experience who is expected to join the Board should the Company finalise an acquisition in the near future.

Going Concern

Management have adopted the going concern basis in preparing the financial statements of the Group for the 13 month period ended 31 January 2015. In assessing whether the going concern basis is appropriate, Management have considered all relevant available information concerning the future of the Group.

In carrying out their review and assessment, Management have prepared budgets and forecasts for the period to 1 July 2016 which the Board has reviewed in detail and approved.

The assumptions used in preparing the budgets and forecasts include:

· The sale of TEG MidContinent, Inc. and TEG Transmission, Co., LLC is completed

· The Company's operating and overhead costs will continue to remain low

· The outstanding litigation does not end adversely or require material settlement

· The Company is able to secure new capital to close a potential transaction

There are uncertainties in the assumptions which could be material - the most significant being the release from the litigation and securing financing to close a new acquisition.

Material uncertainties for the next 12 months include:

· Commodity price fluctuations: further instability in the oil price may affect the Company's access to funding, thereby limiting it's ability to do business in the sector

· Liquidity: the Company's financial resources are limited, therefore a lack of access to sufficient capital could result in the delay or curtailment of operations

Financial Review

During the period, TEG USA produced a total of 28,898 barrels of oil, generating revenues of circa $2.4m. The Company's secondary activity was the operation of TEG MidContinent which produced 2,350 barrels of oil during the same period, generating revenues of circa $0.1m. TEG MidContinent ceased production in November 2014.

TEG Transmission stayed dormant during the year due to lack of capital to connect the pipeline to any production facilities.

The realised oil prices averaged $88 a barrel in California during the period, which was a slight reduction on the $99 a barrel realised in 2013 - however, the Group still benefits from a favourable premium paid for heavy oil in California. Realised oil prices in Kansas averaged $65 a barrel during the period compared to $85 a barrel in 2013, while operating costs were unchanged.

Loss for the period

Cost of sales (lease operating expenses and royalties) was $2.0 million compared to $1.9 million in 2013. The increase in costs is due to fixed costs not decreasing, higher repairs and maintenance expenses.

After deducting the cost of sales from revenue, the gross profit from oil sales during the period was $0.3 million (2013: $2.8 million) - these amounts have been included in discontinued operations.

General and administrative expenses recognised during the period remained high largely due to significant legal expenses incurred during the period, as well as high levels of corporate overheads.

The most significant impact on the loss for the financial period, however, is in relation to the two impairments recognised, as disclosed in notes 10 and 11 to the financial statements. This resulted from the sale of TEG USA and the Letters of Intent received for the purchase of TEG MidContinent and TEG Transmission. An impairment of $3.4m was recognised for the potential sale of these assets.

As a result of the transaction with Hawker Energy LLC, a loss of $1.4m was recognised given the agreed consideration for the purchase of the assets as well as costs to release the Company's status as a co-borrower on the outstanding loan with the Bank of the West.

Functional currency

The financial statements have been presented in United States Dollars ('USD') which is the Company's functional currency. All foreign currency transactions are converted to USD at the exchange rate on the date of the transaction. The GBP to USD foreign exchange rate on 31 January 2015 was 1.50.

The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations. The Directors have elected to prepare the financial statements for the Group in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

International Accounting Standard 1 requires that financial statements present fairly for each financial year the Group's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for Preparation and Presentation of Financial Statements". In virtually all circumstances, a fair presentation will be achieved by compliance with all IFRS. The Directors are also required to:

· Select suitable accounting policies and then apply them consistently;

· Make judgements and accounting estimates that are reasonable and prudent;

· Provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance.

· Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business

The Directors are responsible for keeping proper accounting records that are sufficient to show an explain the Group's transactions, with reasonable accuracy at any time, the financial position of the Group, for safeguarding the assets and for taking responsible steps for the prevention and detection of fraud and other irregularities.

Statement of Disclosure to Auditors

So far as the Directors are aware, there is no relevant audit information of which the Group's auditors are unaware. Additionally, the Directors have taken all necessary steps that they ought to have taken as Directors in order to make themselves aware of all relevant audit information and to establish that the Group's auditors are aware of that information.

Raylene Whitford

Chief Financial Officer

29 June 2015INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SEFTON RESOURCES, INC.

Report of the Independent Auditor on the Financial Statements

We have audited the accompanying financial statements of Sefton Resources Inc., which comprise the consolidated statement of financial position, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows, and notes, for the period ended 31 January 2015. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards (IFRS) as adopted by the European Union.

This report is made solely to the Group's members, as a body, in accordance with the terms of our engagement letter. Our audit work has been undertaken so that we might state to the Group's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group and the Group's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of Directors and Auditor

As described in the statement of Directors' responsibilities set out on page 6, the Directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). These standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the Audit of the Financial Statements 

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors, and the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on Consolidated Financial Statements

In our opinion:

· The consolidated financial statements give a true and fair view of the state of the Group's affairs as at 31 January 2015 and of the results of the Group for the period then ended;

· The consolidated financial statements have been properly prepared in accordance with IFRS as adopted by the European Union.

Sanjay Parmar,

Chartered Accountant

(Auditor in charge)

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

The annual financial statements set out on pages 8 to 12 were approved and authorised for issue by the Board of Directors and signed on its behalf on 29 June 2015 by:

Raylene Whitford,

Chief Financial Officer

The accompanying notes form part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows (continued)

Note to the consolidated statement of cash flows:

For the purposes of the consolidated statement of cash flows, cash and cash equivalents include held in banks. Cash and cash equivalents at the end of the reporting period as shown in the consolidated statement of cash flows can be reconciled to the related items in the consolidated balance sheet as follows:

Notes to the Consolidated Financial Statements

1. Accounting Policies

General information

Sefton Resources, Inc. (the "Company" and together with its subsidiaries, the "Group") was incorporated on January 17, 1995, as a British Virgin Islands corporation and has been primarily engaged in the exploration, development, and production of oil and natural gas, as well as the gathering and transporting natural gas in the Continental United States. The Group's properties are located in California and Kansas, USA.

The Group's consolidated financial statements are presented in US Dollars, which is the Group's functional and presentation currency.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. All accounting standards and interpretations issued by the International Accounting Standards Board and the IFRS Interpretations Committee effective for the periods covered by these financial statements have been consistently applied to all periods presented, unless otherwise stated. The consolidated financial statements have been prepared under the historical cost convention.

 Basis of consolidation

The consolidated financial statements incorporate the results of the Company and its subsidiaries as at 31 January 2015.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the reporting period are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Intercompany transactions, balances and unrealised gains on transactions between Group entities (the Company and its subsidiaries) are eliminated on consolidation.

At 31 January 2015, the Group's subsidiaries, all of which are registered and incorporated in the United States, and included in the consolidated Group financial statements, were:

TEG MidContinent, Inc. 100%

TEG Transmission, Co., LLC 100%

As Management were committed to a plan to sell the assets in the subsidiaries and a Letter of Intent was received from two independent potential buyers, they were classified as Non-current Assets Held for Sale in the financial statements, as per IFRS 5.

The Company signed a binding Purchase and Sale agreement for TEG USA, Inc. on 30 January 2015, the date which Management have determined that the Company gave up control of this subsidiary. Therefore, in line with IFRS 5, this subsidiary was classified as a discontinued operation as at the fiscal year end.

Notes to the Consolidated Financial Statements

New accounting standards and interpretations

The Group has reviewed new and amended standards and interpretations currently in issue but not effective as of 31 January 2015 and determined none of the new standards and interpretations will have significant impact on the Company's reported results.

Amendments to existing standards and new standards which may apply to the Group in future accounting periods are:

Financial instruments

Financial instruments are recognised when the Group becomes a party to contractual provisions of the instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Notes to the Consolidated Financial Statements

Financial assets

The Group's financial assets are all classified as loans and receivables. The Group's loans and receivables comprise trade and other receivables, as well as cash and cash equivalents.

Cash and cash equivalents

Cash and cash equivalents include deposits held at call with banks and other short-term highly liquid investments which are subject to insignificant risk of changes in value. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated balance sheet.

Trade and other receivables

These arise principally through the provision of supplies of oil and gas (e.g. trade receivables), but also incorporate other types of contractual monetary assets.

They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables and is recognised in the statement of comprehensive income.

Financial liabilities

Trade payables and other short-term monetary liabilities are classified as financial liabilities and are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Bank borrowings and loan notes, including convertible loan notes which do not qualify as compound financial instruments, are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

There is no material difference between the book value and fair value of financial instruments.

Equity instruments

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

Notes to the Consolidated Financial Statements

Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 When the Group is committed to a sale plan involving the loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Exploration and evaluation costs

Exploration and evaluation expenditure, in respect of each area of interest, is accounted for under the successful efforts method.

Costs incurred prior to obtaining the legal rights to explore an area are expensed immediately to the statement of comprehensive income.

Exploration acquisition costs relating to established oil and gas exploration areas are capitalised as exploration and evaluation assets within intangible assets.

The costs of drilling exploration wells are initially capitalised within exploration and evaluation assets pending the results of the well. Costs are expensed where the well does not result in the successful discovery of potentially economically recoverable reserves.

All other exploration and evaluation expenditure, including general administration costs, geological and geophysical costs, and new venture expenditure is expensed as incurred, except where the expenditure relates to an exploration discovery for which, at balance sheet date, an assessment of the existence or otherwise of economically recoverable reserves is not yet complete; or the expenditure relates to an area of interest under which it is expected that the expenditure will be recouped through successful development and exploitation or by sale.

When an oil or gas field has been approved for commercial development, the accumulated exploration and evaluation costs are transferred to production assets within property, plant and equipment.

 Net proceeds from any disposal of an exploration asset are initially credited against the previously capitalised costs. Any surplus proceeds are credited to the statement of comprehensive income.

Notes to the Consolidated Financial Statements

 Development expenditure includes past exploration and evaluation costs, pre-production development costs, development drilling, development studies and other subsurface expenditure pertaining to that area of interest.

The definition of an area of interest for development expenditure is narrowed from the exploration permit for exploration and evaluation expenditure to the individual geological area where the presence of an oil or natural gas field exists, and in most cases will comprise an individual oil or gas field. Development expenditure is reviewed for impairment at each reporting date where there is an indication that the individual geological area may be impaired.

Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward development costs are transferred into production assets within property, plant and equipment, and depreciated on the units of production basis over the life of economically recoverable reserves.

Other intangible assets

Other intangible assets include expenditure relating to the development of gas gathering and transportation assets.

Amortisation is not charged on costs carried forward in respect of gas gathering and transportation development assets. When such assets are certified as ready for use, carried forward development costs are transferred into gas transportation assets within property, plant and equipment and depreciated.

Property, plant and equipment

Costs related to surface plant and equipment and any associated land and buildings are accounted for as property, plant and equipment.

Property, plant and equipment are stated at historical cost less depreciation and any impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of these items. Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the costs can be measured reliably.

All other costs, including repairs and maintenance costs, are charged to the statement of comprehensive income in the period in which they are incurred.

Depreciation is provided on all property, plant and equipment and is calculated as follows:

Depreciation is provided on cost less residual value. The residual value, depreciation methods and useful lives are annually reassessed.

Notes to the Consolidated Financial Statements

Impairment of assets

At each balance sheet date Management reviews the carrying amounts of the Group's tangible and intangible assets, to determine whether there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior periods. A reversal of an impairment loss is recognised in the statement of comprehensive income immediately.

Provisions

A provision is recognised on the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions are measured at the present value of management's best estimate of expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Asset retirement obligation

The Group recognises the present value of the future estimated costs of plugging oil and gas wells and removing surface facilities associated with those oil and gas wells in the financial statements in the period in which the obligation arises.

Upon initial recognition of the liability, an asset retirement cost is capitalised by increasing the carrying amount, included in oil and gas properties, by the same amount as the liability. In periods subsequent to initial measurement, the capitalised asset retirement cost is allocated to depreciation and amortisation expense at the unit of production rate associated with the corresponding asset.

Notes to the Consolidated Financial Statements

 The unwinding of the discount is recognised as an accretion expense in the statement of comprehensive income.

Revenue recognition

Revenue from the sale of oil and gas is recognised when significant risks and rewards of ownership are transferred to the buyer.

The Group follows the gross method of accounting for royalties where the royalty owners' share of sales is accounted for as an operating expense of the Group, and calculated as a percentage of revenue.

Income taxes

Current income tax is based on taxable profit for the year.

The Group's current tax assets and liabilities are calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. The Group's ultimate parent is incorporated in the British Virgin Islands and is not subject to US income tax; however, the parent's subsidiaries are incorporated and operate in the US and are subject to US income taxes.

Deferred income tax is provided in full, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates and laws that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority on either the same taxable entity or different taxable entities which intend to settle or realise the amounts simultaneously.

Foreign currency

The presentational currency for the Group's consolidated financial statements is US dollars and it is this currency in which the Group reports.

The Group's assets at this time are all in the United States and the majority of transactions are made in US dollars.

Foreign currency transactions by Group companies are recorded in their functional currency (being US dollars) at the exchange rate at the date of the transaction. Monetary assets and liabilities have been translated at rates in effect at the balance sheet date, with any exchange adjustments being charged or credited in the statement of comprehensive income.

Notes to the Consolidated Financial Statements

Employment benefits

Provision is made in the financial statements for all employee benefits.

The Group's contributions to defined contribution pension plans are charged to profit or loss in the period to which the contributions relate.

The Group provides for long-term retirement obligations for certain employees. These provisions are measured at the present value of management's best estimate of expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Share-based payments

Where share options and warrants have been granted to employees, consultants, Directors and suppliers, IFRS 2 has been applied whereby the fair value of the options is measured at the grant date and spread over the period during which the counterparties become entitled to the options. A Black Scholes options valuation model is used to assess the fair value, taking into account the terms and conditions attached to the options. The fair value of goods and services received are measured by reference to the fair value of options.

The cost of equity-settled transactions is recognised, together with a corresponding increase in the retained earnings reserve, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant recipients become fully entitled to the award ("the vesting date").

The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest.

At the end of each period, the Group 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 the statement of comprehensive income, with a corresponding adjustment to equity.

The charge or credit to the statement of comprehensive income for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied.

For additional detail regarding share-based compensation see note 17.

Risk management objectives and policies

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.

Notes to the Consolidated Financial Statements

The Group uses various financial instruments including cash, loans, and items such as debtors and creditors that arise directly from its operations. The existence of these financial instruments exposes the Group to a number of financial risks, which are described in note 15 of these financial statements.

Critical accounting estimates and judgements

In the process of applying the Group's accounting policies, Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Exploration and evaluation costs

The Group's accounting policy leads to the capitalisation of intangible exploration and evaluation assets, where it is considered likely that the amount will be recoverable by future exploitation or sale or alternatively where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This requires management to make estimates and assumptions as to the future events and circumstances, especially in relation to whether an economically viable extraction operation can be established. Such estimates are subject to change and following initial capitalisation, should it become apparent that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the statement of comprehensive income.

Estimation of oil and gas reserves

Proved oil and gas reserves are the estimated quantities of oil and gas which geological andengineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

Estimates of oil and gas reserves are inherently imprecise, require the application of judgement and are subject to future revision. Accordingly, financial and accounting measures (such as the standardised measure of discounted cash flows, depreciation, depletion and amortisation charges, and decommissioning provisions) that are based on proved reserves are also subject to change.

Impairment of non-financial assets

Management review all non-financial assets at each balance sheet date to determine whether there are any indications of impairment. If any such indication exists, an estimate of the recoverable amount is performed, and an impairment loss is recognised to the extent that carrying amount exceeds recoverable amount.

Share-based payments

In determining the fair value of equity-settled share-based payments and the related charge to the statement of comprehensive income, the Group makes assumptions about future events and market conditions; in particular, judgement must be made as to the likely number of shares that will vest, and the fair value of each award granted. The fair value is determined using a valuation model which is dependent on further estimates, including the Company's future dividend policy, the timing with which options will be exercised and the future volatility in the price of the Company's shares.

Notes to the Consolidated Financial Statements

Such assumptions are based on publicly available information. Different assumptions about these factors to those made by the Company could materially affect the reported value of share-based payments.

Asset retirement obligation (provision for abandonment)

Estimates of the amounts of provision for abandonment recognised are based on current legal and constructive requirements, technology and price levels. As actual outflows may be different from estimates due to changes in laws, regulations, technology, prices and conditions, and can take place in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take account of such changes. For additional detail regarding provision for abandonment see note 13.

Segmental reporting

The Directors have determined that the Group has two principal business activities - oil and gas exploration and production, and natural gas gathering and transportation - both of which are conducted solely within the United States at this time.

For the 13 month period ended 31 January 2015, the Group's revenues derived solely from theproduction and sale of oil.

Subsequent to a decision to dispose of TEG Transmission being made prior to the reporting date, assets relating to natural gas gathering and transportation at 31 January 2015 are included within non-current assets held for sale (at 31 December 2013 these were recognised within intangible assets and disclosed within note 8).

Subsequent to the disposal of the Group's interests in TEG USA and a decision to dispose of TEGMidContinent being made prior to the reporting date, assets relating to oil and gas exploration and production are included are included within non-current assets held for sale (at 31 December 2013 these were recognised within both intangible assets and property, plant and equipment, and are disclosed accordingly in notes 8 and 9).

All costs associated with natural gas gathering and transportation were capitalised within intangible assets (note 8) prior to reclassification to non-current assets held for sale, as commercial activity has not yet commenced in this segment.

2. Finance Costs

The Group's finance costs during the 13 month period ended 31 January 2015 and the year ended 31 December 2013 were as follows:

3. Income Tax Expense 

Sefton Resources, Inc., the parent company, is a British Virgin Islands company and is not subject to taxes based on its jurisdiction. The operating subsidiaries, TEG MidContinent and TEG Transmission are taxed as US entities.

United States Tax Provision

A reconciliation of the provision for income taxes computed at the United States statutory rate to the provision for income taxes as shown in the financial statements of operations for the 13 month period ended 31 January 2015 and the year ended 31 December 2013 is summarised below:

The components of the US deferred tax assets and liabilities as at 31 January 2015 and 31 December 2013 are as follows:

The Group has a $5,135,718 operating loss carryover (31 December 2013: $16,650,344) and $0 percentage depletion carry forward for US federal income tax purposes as of 31 January 2015 (31 December 2013: $2,593,302). The net operating losses may offset taxable income through the year ending 31 December 2034 and begin expiring in the year ending 31 December 2024.

The Group provided a valuation allowance against its deferred tax assets as at 31 January 2015 and 31 December 2013 since it is uncertain whether net deferred tax assets will be fully utilised on future income tax returns.

4. Staff Costs 

The average number of Employees, Directors and Consultants employed or contracted by the Group during the 13 month period ended 31 January 2015 and the year ended 31 December 2013, by category was:

The aggregate compensation expense incurred by the Group for these Employees, Directors and Consultants during the 13 month period ended 31 January 2015 and the year ended 31 December 2013, by category was as follows:

A portion of the compensation expense of the Employees, Directors and Consultants included in the table above was capitalised into the cost of oil and gas properties where those costs are directly attributable costs associated with these assets.

5. Directors' Remuneration

Total remuneration comprises emoluments, which include salaries or fees accrued, bonuses accrued and health and life insurance benefits received.

Total remuneration also includes pension and retirement benefits accrued, and share-based awards. Ad hoc bonuses may be paid to reward exceptional performance. Such bonuses are decided by the Board on the recommendation of the compensation committee. Share options are also awarded to Directors, employees and consultants from time to time.

The granting of share options to individuals is determined taking into account seniority, commitment to the business and recent performance. Such share option awards are also decided by the Board on the recommendation of the compensation committee. For additional information on share awards and share-based compensation see note 17.

The key management of the Group consists of the Board of Directors. The total remuneration for each Director for the 13 month period ended 31 January 2015 and the year ended 31 December 2013 is shown below.

**Non-Executive Director during the period ended 31 January 2015

** Includes fees paid under a consultancy agreement with C & J Resources Inc., which was owned by Mr Ellerton and his wife. Mr Ellerton resigned as a Director 29 August 2013. The fees shown represent compensation whilst in office as a Director

*** Resigned 19 June 2013. Fees shown represent compensation whilst in office as a director

6. Retirement Obligation

The Group provides a retirement benefit to certain employees with employment or service contracts as described below.

The following outlines the Group's retirement obligations to its employees:

The retirement obligation is based on the individual's ending monthly salary or fee arrangement at the date of retirement times a certain multiple for the total number of years in service. This multiple ranges from one month of base salary or fee for two years of service or less, to two and a half times monthly salary or fee for ten or more years of service.

As part of the restructuring in 2015, the retirement obligations and severance payments to employees were agreed post-year end.

7. Investments

Investments represent shares and share warrants in Hawker Energy LLC received in consideration for the disposal of TEG USA (note 20):

As part of the settlement with the Bank of The West for lifting the Company's status as co-borrower on the outstanding loan facility, 1.5 million shares of Hawker common stock and 5 million warrants were cancelled and returned to Hawker, and as such, the value of these investments were written down in the accounts as at 31 January 2015. Refer to note 22 for further details on the post balance sheet date events.

8. Intangible Assets

Intangible exploration assets for all years presented consist of the Group's investment in oil and gas properties and pipeline interests in Kansas.

At 31 January 2015, all intangible assets were held within disposal groups held for sale as a result of decisions taken prior to the reporting date to dispose of the remaining operating subsidiaries held by the Group.

As a result, impairments have been recognised to reduce the assets according to the net realisable value of the disposal groups, which are reclassified to non-current assets held for sale (note 11).

9. Property, Plant and Equipment

Production assets consist of the Group's investment in producing oil properties in California and Kansas.

Other plant and equipment assets include office and computer equipment and vehicles.

At 31 January 2015, all remaining production assets were held within disposal groups held for sale as a result of decisions taken prior to the reporting date to dispose of the remaining operating subsidiaries held by the Group.

As a result, impairments have been recognised to reduce the assets according to the net realisable value of the disposal groups, which are reclassified to non-current assets held for sale (Note 11).

10. Discontinued Operations

At 31 January 2015, all of the Group's operating activities were reclassified as discontinued as a result of the sale of TEG USA (note 20), and the decisions made prior to the reporting date to dispose of TEG MidContinent and TEG Transmission companies resulting in these companies being classified as held for sale (note 11).

Loss for the period from discontinued operations

11. Non-Current Assets Held for Sale

Decisions were made prior to 31 January 2015 to dispose of the Group's remaining operational subsidiaries, TEG MidContinent and TEG Transmission. Letters of Intent regarding the sale of these subsidiaries were received from to different third parties during January 2015 and May 2015.

As a result of these decisions, the assets and liabilities of these two subsidiaries are determined to be a disposal group held for sale, and the assets and liabilities have been reclassified on the Group balance sheet accordingly.

Net assets held for sale 400

The major classes of assets and liabilities of the disposal group at the end of the reporting period are as follows:

12. Trade and Other Receivables