SOLO.L Regulatory News (SOLO)

Solo Oil plc

Neil Ritson

+44 (0) 20 7440 0642

Beaumont Cornish Limited

Nominated Adviser and Joint Broker

Roland Cornish

+44 (0) 20 7628 3396

Old Park Lane Capital Plc

Joint Broker

Michael Parnes

Shore Capital

Joint Broker

Pascal Keane

Jerry Keen (Corporate Broker)

Bell Pottinger

Public Relations

Mark Antelme

Henry Lerwill

+44(0) 20 7493 8188

+44 (0) 20 7408 4090

+44 (0) 20 7861 3232

18 months ended

Year ended

Notes

31 December 2013

30 June 2012

£000's

£000's

Revenue

-

-

Administrative expenses

3

(1,485)

(917)

Loss from operations

(1,485)

(917)

Impairment charge

9

(1,658)

-

Finance costs

6

-

(100)

Finance revenue

7

26

-

Loss before taxation

(3,117)

(1,017)

Income tax

5

-

-

Loss for the period

(3,117)

(1,017)

Other comprehensive income

Exchange differences on translation of foreign operations

-

-

Other comprehensive income for the year net of taxation

-

-

Total comprehensive income for the period attributable to equity holders of the parent

(3,117)

(1,017)

Loss per share (pence)

Basic and diluted

8

(0.08)

(0.04)

Notes

31 December 2013

30 June 2012

£000's

£000's

Assets

Non- current assets

Investment in subsidiaries

11

-

-

Intangible asset

9

8,449

8,661

Available for sale assets

10

816

-

Total non-current assets

9,265

8,661

Current assets

Trade and other receivables

12

1,291

870

Cash and cash equivalents

1,956

112

Total current assets

3,247

982

Total assets

12,512

9,643

Liabilities

Current liabilities

Trade and other payables

13

(116)

(1,170)

Total liabilities

(116)

(1,170)

Net assets

12,396

8,473

Equity

Share capital

14

460

269

Deferred share capital

14

1,831

1,831

Share premium

19,852

13,243

Share-based payment reserve

696

507

Warrant reserve

-

33

Retained loss

(10,443)

(7,410)

12,396

8,473

The financial statements were approved by the board of directors and authorised for issue on 29 April 2014.

They were signed on its behalf by ;

David Lenigas

Neil Ritson

Director

Director

18 Months ended

Year ended

31 December 2013

30 June 2012

£000's

£000's

Cash outflow from operating activities

Operating loss

(1,485)

(917)

Adjustments for:

Share-based payments

240

69

(Increase) in receivables

(421)

(425)

(Decrease)/increase in payables

(1,054)

1,014

Cash used in operating activities

(2,720)

(259)

Income tax

-

-

Net cash outflow from operating activities

(2,720)

(259)

Cash flows from investing activities

Interest received

26

-

Payments to acquire intangible assets

(1,446)

(3,649)

Payments to acquire Available for sale investment

(516)

-

Net cash outflow from investing activities

(1,936)

(3,649)

Cash flows from financing activities

Proceeds on issuing of ordinary shares

6,878

1,929

Cost of issue of ordinary shares

(378)

-

Net cash inflow from financing activities

6,500

1,929

Net increase/(decrease) in cash and cash equivalents

1,844

(1,979)

Cash and cash equivalents at beginning of the period

112

2,091

Cash and cash equivalents at end of the period

1,956

112

Deferred

Share

Share

share

Share

based

Warrant

Accumulated

Total

capital

capital

premium

payments

reserve

losses

equity

£000's

£000's

£000's

£000's

£000's

£000's

£000's

Balance at 30 June 2011

233

1,831

11,250

438

33

(6,393)

7,392

Loss for the year

-

-

-

-

-

(1,017)

(1,017)

Total comprehensive income

-

-

-

-

-

(1,017)

(1,017)

Share issue

36

-

1,993

-

-

-

2,029

Cost of share issue

-

-

-

-

-

-

-

Share-based payment charge

-

-

-

69

-

-

69

Total contributions by and distributions to owners of the Company

36

-

1,993

69

-

-

2,098

Balance at 30 June 2012

269

1,831

13,243

507

33

(7,410)

8,473

Loss for the period

-

-

-

-

-

(3,117)

(3,117)

Total comprehensive income

-

-

-

-

-

(3,117)

(3,117)

Share issue

191

-

6,987

-

-

-

7,178

Cost of share issue

-

-

(378)

-

-

-

(378)

Share options and warrants lapsed

-

-

-

(51)

(33)

84

-

Share-based payment charge

-

-

-

240

-

-

240

Total contributions by and distributions to owners of the Company

191

-

6,609

189

(33)

84

7,040

Balance at 31 December 2013

460

1,831

19,852

696

-

(10,443)

12,396

1

Summary of significant accounting policies

General information and authorisation of financial statements

Solo Oil Plc is a public limited Company incorporated in England & Wales. The address of its registered office is Suite 3B, Princes House, 38 Jermyn Street, London SW1Y 6DN. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange. The financial statements of Solo Oil plc for the 18 months ended 31 December 2013 were authorised for issue by the Board on 29 April 2014 and the balance sheets signed on the Board's behalf by Mr. Neil Ritson and Mr David Lenigas.

Statement of compliance with IFRS

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Company are set out below.

New standards and interpretations not applied

IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:

IFRS 13 Fair Value Measurement

The Company has applied IFRS13 for the first time in the current year. IFRS13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. IFRS13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS13 includes extensive disclosure requirements.

IFRS13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard.

In accordance with these transitional provisions, the Company has not made any new disclosures required by IFRS13 for the 2012 comparative period. Other than the additional disclosures, the application of IFRS13 has not had any impact on the amounts recognised in the consolidated financial statements.

Amendments to IAS1 Presentation of Financial Statements

(as part of the Annual Improvements to IFRSs 2009; 2011 Cycle issued in May 2012)

The Annual Improvements to IFRSs 2009; 2011 have made a number of amendments to IFRSs. The amendments that are relevant to the Company are the amendments to IAS1 regarding when a statement of financial position as at the beginning of the preceding period (third statement of financial position) and the related notes are required to be presented. The amendments specify that a third statement of financial position is required when a) an entity applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items in its financial statements, and b) the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position. The amendments specify that related notes are not required to accompany the third statement of financial position.

This has no impact for the 2013 financial statements.

Amendments to IFRS7 Disclosures

The Company has applied the amendments to IFRS7 Disclosures-Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to IFRS7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

As the Company does not have any offsetting arrangements in place, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the consolidated financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

IFRS9 Financial Instruments

IFRS10 Consolidated Financial Statements

IFRS12 Joint Arrangements#

IAS27 (revised) Investment Entities

IAS28 (revised) Investments in Associates and Joint Ventures

IAS32 (revised) Offsetting Financial Assets and Financial Liabilities

IAS36 (revised) Recoverable Amount Disclosures for Non Financial Assets

IAS39 (revised) Novation of Derivatives and Continuation of Hedge Accounting

IFRIC Interpretation21 Levies

The directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the financial statements of the Group in future periods, except as that IFRS9 will impact both the measurement and disclosures of Financial Instruments.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods, however, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.

The financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

Available for sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group's available-for-sale financial assets include unlisted securities. These available-for-sale financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in profit or loss within finance income

Revenue recognition

Revenue is recognised to the extent that the right to consideration is obtained in exchange for performance. Payment received in advance of performance is deferred on the balance sheet as a liability and released as services are performed or products are exchanged as per the agreement with the customer.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Foreign currencies

Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period.

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of the overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve").

Taxation

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

The current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the consolidated income statement.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If there is such indication then an estimate of the asset's recoverable amount is performed and compared to the carrying amount.

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. 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.

If the recoverable amount of an asset is estimated to be less that its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in prior periods. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Provisions

Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank and short term deposits with banks and similar financial institutions.

Trade and other receivables

Trade and other receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Financial liability and equity

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

Trade and other payables

Trade and other payables are non interest bearing and are stated at their nominal value.

Equity instruments

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

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. 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 the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received. Equity-settled share-based payments are measured at fair value at the date of grant except if the value of the service can be reliably established. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.

Critical accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. 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.

Impairment of goodwill

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows - actual outcomes may vary. If the carrying amount exceeds the recoverable amount then impairment is made.

Useful lives of intangible assets and property, plant and equipment

Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are based on judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.

Share-based payments

The Group utilised an equity-settled share-based remuneration scheme for employees. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options are estimated by using Black-Scholes valuation method as at the date of grant. The assumptions used in the valuation are described in note 12 and include, among others, the expected volatility, expected life of the options and number of options expected to vest.

Determination of fair values of intangible assets acquired in business combinations

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that would have been avoided as a result of the trademark or a patent being owned. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the asset.

Income taxes

The Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of such matters is different than the amounts recorded, the differences will impact income tax expense in the period in which such determination is made.

Deferred taxation

Deferred tax assets are recognised when it is judged more likely than not that they will be recovered.

Equity reserves

Share capital is determined using the nominal value of shares that have been 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.

The share based payment reserve represents the cumulative amount which has been expensed in the income statement in connection with share based payments, less any amounts transferred to retained earnings on the exercise of share options.

Retained earnings include all current and prior period results as disclosed in the income statement

Going Concern

The financial report for the period ended 31 December 2013 has been prepared on a going concern basis.

2

Turnover and segmental analysis

The Company has not generated any revenues from external customers during the period.

An operating segment is a distinguishable component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Company'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. The chief operating decision maker has defined that the Company's only reportable operating segment during the period is mining.

Subject to further acquisitions the Company expects to further review its segmental information during the forthcoming financial year.

In respect of the total assets, £3,247,000 (2012: £982,000) arise in the UK, and £1,000,000 (2012: £2,423,000) arise in Canada, £7,449,000 arise in Tanzania (2012: £6,238,000), and £816,000 arise in Switzerland (2012: £Nil).

3

Operating loss

18 Months ended

31 December 2013

£000's

Year ended

30 June 2012

£000's

Loss from operations has been arrived at after charging:

Directors fees

324

167

Salaries and wages

87

64

Audit fees

16

15

Share-based payments

240

69

Amounts payable to auditors and their associates in respect of both audit and non-audit services:

Audit services - statutory audit - Chapman Davis LLP

16

15

16

15

4

Employee information and directors emoluments

18 Months ended

31 December 2013

£000's

Year ended

30 June 2012

£000's

Staff information

The average number of employees (excluding executive directors) was :

1

1

Their aggregate remuneration comprised :

£000's

£000's

Wages and salaries

87

64

Total

87

64

Directors' remuneration

Total

422

236

18 Months ended 31 December 2013

Salary and fees

£000's

Share-based payments

£000's

Total

£000's

Neil Ritson

138

49

187

David Lenigas

150

49

199

Sandy Barblett

36

-

36

324

98

422

Year ended 30 June 2012

Salary and fees

£000's

Share-based payments

£000's

Total

£000's

Neil Ritson

65

31

96

David Lenigas

60

31

91

Sandy Barblett

24

7

31

Kiran Morzaria (*)

18

-

18

167

69

236

5

Taxation

18 Months ended

31 December 2013

£000's

Year ended

30 June 2012

£000's

Current tax expense

UK corporation tax and income tax of overseas operations on profits for the period

-

-

Total income tax expense

-

-

The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the year are as follows:

Loss for the period

(3,117)

(1,017)

Standard rate of corporation tax in the UK

23/24%

24/26%

Loss on ordinary activities multiplied by the standard rate of corporation tax

(732)

(260)

Expenses not deductible for tax purposes

446

17

Future income tax benefit not brought to account

286

243

Current tax charge for period

-

-

No deferred tax asset has been recognised because there is uncertainty of the timing of suitable future profits against which they can be recovered.

6

Finance costs

18 Months ended

31 December 2013

£000's

Year ended

30 June 2012

£000's

Equity Line Facility commitment fee (Note 17)

-

100

7

Finance revenue

18 Months ended

31 December 2013

£000's

Year ended

30 June 2012

£000's

Interest on cash deposits

26

-

8

Loss per share

18 Months ended

31 December 2013

£000's

Year ended

30 June 2012

£000's

The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the period:

Net loss after taxation (£000's)

(3,117)

(1,017)

Number of shares

Weighted average number of ordinary shares for the purposes of basic loss per share (millions)

3,960.3

2,435.3

Basic and diluted loss per share (expressed in pence)

(0.08)

(0.04)

As inclusion of the potential ordinary shares would result in a decrease in the earnings per share they are considered to be anti-dilutive, as such, a diluted earnings per share is not included.

9

Intangible assets

Deferred exploration expenditure

£000's

Total

£000's

Cost

As at 30 June 2011

3,756

3,756

Additions

4,905

4,905

Disposal

-

-

As at 30 June 2012

8,661

8,661

Additions

1,446

1,446

Disposals

-

-

As at 31 December 2013

10,107

10,107

Accumulated amortisation and impairment

As at 30 June 2011

-

-

Impairment charge

-

-

Balance at 30 June 2012

-

-

Impairment charge

1,658

1,658

Balance at 31 December 2013

1,658

1,658

Net book value

As at 31 December 2013

8,449

8,449

As at 30 June 2012

8,661

8,661

Impairment Review

At 31 December 2013, the directors have carried out an impairment review and have considered that an impairment write-down of £1,658,000 is required against the Company's 28.56% direct working interest in all of Reef Resources Limited's (Reef) Ontario properties (as detailed in the Chief Executive's Report). This impairment charge is as a result of Reef's unsolicited offer to repurchase the Company's entire 28.56% interest in November 2013, subject to Reef obtaining the necessary financing. The Company after discussions are looking to attain approximately CAD$1.8 - $2million, and as a result of the discussions and preliminary valuations there mentioned, the Board has taken the prudent view to impair the carrying value of the interest in Reef down to approximately £1million.  (2012: nil).

The directors are of the opinion that after the impairment charge, the carrying value is now stated at fair value.

10

Available for sale financial assets

31 December 2013

30 June 2012

Investment in unlisted securities

£000's

£000's

Valuation at beginning of the period

-

-

Additions at cost

816

-

Valuation at the end of the period

816

-

On 21 May 2013, the Company completed the acquisition of a 15% shareholding in Pan Minerals Oil & Gas A.G.("Pan Minerals") , a company incorporated and resident in Switzerland, with investments in Africa, for a total consideration of £500,000, of which £200,000 was cash consideration and £300,000 by way of the issue of 60million Ordinary shares in Solo.

On 18 October 2013, the Company acquired a further 4.9% shareholding in Pan Minerals for a cash consideration of US$500,000 (£316,000).

Pan Minerals is not listed on any stock exchange.

11

Investment in subsidiaries

31 December 2013

30 June 2012

£000's

£000's

As at 1 July

-

-

Additions

-

-

At 31 December

-

-

The subsidiaries of Solo Oil Plc, all of which are Dormant, and have been since incorporation, are as follows:

Name

Country of incorporation

Proportion of ownership interest

Solo Oil International Limited

UK

100%

12

Trade and other receivables

31 December 2013

30 June 2012

Current trade and other receivables

£000's

£000's

Trade debtors

-

-

Prepayments

52

29

Other debtors

1,239

841

1,291

870

The directors consider that the carrying amount of trade and other receivables approximates to their fair value.

13

Trade and other payables

31 December 2013

30 June 2012

Current trade and other payables

£000's

£000's

Trade payables

66

852

Other creditors

32

258

Accruals

18

60

116

1,170

The directors consider that the carrying amount of trade payables approximates to their fair value.

14

Share capital

Number of shares

Nominal value

£000's

a) Called up, allotted, issued and fully paid: Ordinary shares of 0.01p each

As at 30 June 2011

2,331,324,634

233

13 Dec 2011 - ELF commitment fee at 0.72p

13,799,990

1

6 Jan 2012 - ELF for cash at 0.69p

59,322,034

6

1 Feb 2012 - ELF for cash at 0.65p

115,384,615

7

28 Feb 2012 - ELF for cash at 0.65p

38,461,538

4

18 May 2012 - ELF for cash at 0.464p

32,301,887

3

22 June 2012 - ELF for cash at 0.424p

30,288,648

3

29 June 2012 - ELF for cash at 0.45p

66,666,667

7

As at 30 June 2012

2,687,550,023

269

26 July 2012 - ELF for cash at 0.40p

90,844,685

9

9 August 2012 - Placing for cash at 0.30p

500,000,000

50

7 December 2012 - Issue for cash at 0.01p

150,000,000

15

11 January 2013 - Placing for cash at 0.45p

333,333,333

33

4 March 2013 - Placing for cash at 0.50p

200,000,000

20

11 March 2013 - Placing for cash at 0.50p

200,000,000

20

15 March 2013 - Placing for cash at 0.40p

375,000,000

38

21 May 2013 - Non- cash issue on acquisition of Pan Minerals at 0.30p

60,000,000

6

As at 31 December 2013

4,596,728,041

460

During the period 1,909million shares were issued (2012: 356million)

b) Deferred shares

Deferred shares of 0.69 pence each (2012: 265,324,634)

265,324,634

1,831

Total share options in issue

During the year68.5 million options were granted (2012: 28 million).

As at 31 December 2013 the options in issue were:

Exercise Price

Expiry Date

Options in Issue

31 December 2013

1.54p

30 April 2018

7,000,000

0.5p

31 December 2020

204,000,000

0.5p

31 December 2015

28,000,000

0.5p

31 December 2020

68,500,000

307,500,000

No options were exercised during the period (2012: nil).

20 million options lapsed during the period (2012: nil).No options were cancelled during the period (2012: nil), 204million options had their expiry date extended to 31 December 2015 from 21 December 2012.

Total warrants in issue

During the period, 375million warrants were issued (2012: nil).

393,550,000 warrants lapsed or were cancelled or exercised during the year (2012: nil).

As at 31 December 2013 there were nil warrants in issue. (2012:18,550,000)

15

Share based payment

During the period the Company issued options and warrants to investors as part of equity placements.

31 December 2013

30 June 2012

Weighted

Number

Weighted

Number

average

average

exercise price

(pence)

exercise price

(pence)

Outstanding at the beginning of the period

0.6

277,550,000

0.6

249,550,000

Granted during the period - warrants

0.4

375,000,000

-

-

Granted during the period - options

0.5

68,500,000

0.5

28,000,000

Forfeited during the period

-

-

-

-

Cancelled during the period - options

-

-

-

-

Exercised during the period

-

-

-

-

Lapsed during the period - options

(0.5)

(20,000,000)

Lapsed during the period - warrants

(0.45)

(393,550,000)

-

-

Outstanding at the end of the period

(options and warrants)

0.5

307,500,000

0.6

277,550,000

The exercise price of options and warrants outstanding at the end of the period ranged between 1.54p and 0.50p and their weighted average contractual life was 6.5 years (2012: 3.3 years).

The weighted average fair value of each option granted during the period was 0.5p (2012: options 0.5p).

The Group used the Black-Scholes model to determine the value of the options and the inputs were as follows:

Issue 20/06/2012

Issue 23/11/12

Share price at grant (pence)

0.43

0.43

Fair Value price at grant (pence)

0.25

0.35

Expected volatility (%)

85.5%

89.5%

Expected life (years)

3.5 years

8.1 years

Risk free rate (%)

4.0%

4.0%

Expected dividends (pence)

nil

Nil

Expected volatility was determined by using the volatility rate used by listed companies in similar industries and those companies with similar sizes.

The total share-based payment expense in the period for the Company was £240,000 expense (2012: £69,000 expense) consisting of:

- £240,000 expense to the income statement (2012: £69,000 expense) , and a charge of £nil to the share premium reserve (2012: £nil charge) relating to new options to employees and directors, and consultants.

£84,000 credit (2012: £nil credit) relating to exercise and expiration of previously issued share options, taken directly to retained earnings.

Employee Benefit Trust

The Company established on 7 December 2012, an employee benefit trust called the Solo Oil Employee Benefit Trust ("EBT") to implement the use of the Company's existing share incentive plan over 5% of the Company's issued share capital from time to time in as efficient a manner as possible for the beneficiaries of that plan. The EBT is a discretionary trust for the benefit of directors and employees of the Company and its subsidiaries.

Accordingly, the trustees of the EBT subscribed for 150,000,000 new ordinary shares of 0.01p each in the Company, at par value per share at an aggregate cost to the Company of £15,000, such shares representing 4.58% of the existing issued share capital of the Company (at that date). The shares held in the EBT are intended to be used to satisfy future awards made by the Company's Remuneration Committee under the share incentive scheme, as detailed in the Company's AIM admission document.

16

Financial instruments

The Company is exposed through its operations to one or more of the following financial risks:

· Fair value or cash flow interest rate risk

· Foreign currency risk

· Liquidity risk

· Credit risk

Policy for managing these risks is set by the Board. The policy for each of the above risks is described in more detail below.

Fair value and cash flow interest rate risk

Currently the Company does not have external borrowings. However, the Company has a policy of holding debt at a floating rate. The directors will revisit the appropriateness of this policy should the Company's operations change in size or nature. Operations are not permitted to borrow long-term from external sources locally.

Foreign currency risk

Foreign exchange risk arises because the Company has operations located in various parts of the world whose functional currency is not the same as the functional currency in which the company's investments are operating. The Company's net assets are exposed to currency risk giving rise to gains or losses on retranslation into sterling. Only in exceptional circumstances will the Company consider hedging its net investments in overseas operations as generally it does not consider that the reduction in volatility in consolidated net assets warrants the cash flow risk created from such hedging techniques.

Liquidity risk

The liquidity risk of each entity is managed centrally by the treasury function. Each operation has a facility with treasury, the amount of the facility being based on budgets. The budgets are set locally and agreed by the board annually in advance, enabling the cash requirements to be anticipated. Where facilities of entities need to be increased, approval must be sought from the finance director. Where the amount of the facility is above a certain level agreement of the board is needed.

All surplus cash is held centrally to maximise the returns on deposits through economies of scale. The type of cash instrument used and its maturity date will depend on the forecast cash requirements.

Credit risk

The Company is mainly exposed to credit risk from credit sales. It is Company policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.

The Company does not enter into complex derivatives to manage credit risk, although in certain isolated cases may take steps to mitigate such risks if it is sufficiently concentrated.

17

Equity Line Facility ("ELF")

The Company secured a Equity Line Facility ("ELF") on 10 November 2011 with Dutchess Opportunity Cayman Fund Ltd ("Dutchess"), which allowed the Company to draw down up to £10million over a 3 year period. The funding was available to drawdown at any time in tranches, by way of subscription for new ordinary shares in the Company, priced at a 5 per cent discount to market price, based on the average daily price for the three days prior to the drawdown request.

The Company incurred a £100,000 commitment fee on securing the facility, which was settled by the issue of 13.8million ordinary shares in the Company.

During the period to 30 June 2012, the Company made 6 drawdown requests totalling £1,928,333, settled by the issue of 342,425,389 ordinary shares in the Company.

During the period to 31 December 2013, a further drawdown of £363,000 was made, with the issue of 90,844,685 ordinary shares, before the termination of the facility under mutual agreement between the parties on 18 October 2012.

18

Related party transactions

There were no transactions between the parent and its subsidiary, which are related parties, during the period. Details of director's remuneration, being key personnel, are given in note 4. There are no other related party transactions during the year.

Remuneration of Key Management Personnel

The remuneration of the directors, and other key management personnel of the Company, is set out below in aggregate for each of the categories specified in IAS24 Related party Disclosures.

18 Months ended

Year ended

31 December 2013

30 June 2012

£'000s

£'000s

Short-term employee benefits

411

231

Share-based payments

150

69

551

300

19

Ultimate controlling party

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

20

Retirement benefit scheme

The Company does not operate either a defined contribution or defined benefit retirement scheme.

21

Commitments

As at 31 December 2013, the Company had no material commitments.

22

Post balance sheet event

On 5 February 2014, the Company entered into a Binding Heads Of Agreement ("HOA") to acquire a 10% interest in Horse Hill Development Ltd, a special purpose company, which holds the rights to 65% participating interest and operatorship, in licence PEDL137 onshore in the UK Weald Basin, for a total of £600,000, broken down into 3 stage payments, of £13,333 immediately, £66,667 on completion of all legal documentation and £520,000 of cash calls for the drilling of the well.