United Oil&gas Regulatory News (UOG)

United Oil & Gas PLC / Index: AIM / Epic: UOG / Sector: Oil & Gas

30 May 2019

United Oil & Gas PLC ("United" or the "Company") 

FINAL AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018

AND

NOTICE OF ANNUAL GENERAL MEETING

United Oil & Gas Plc, the AIM-listed oil and gas exploration and development company, is pleased to announce its audited results for the year ended 31 December 2018 and to confirm that the 2018 Annual Report and Financial Statements ("Annual Report"), together with a Notice of AGM ("Notice") will shortly be posted to shareholders. The AGM will be held on June 24 at 12pm at the offices of Kerman and Co, 200 The Strand, London.

Pursuant to Rule 20 of the AIM Rules for Companies, copies of both the Annual Report and the Notice will shortly be available for inspection at www.uogplc.com.

CEO, Brian Larkin, reported:

"We are delighted to report on a year of considerable progress as we grow an exciting portfolio of exploration, appraisal and development assets. 2018 saw development at an operations level, through successful drilling in Italy and seismic and other development activity across our portfolio. It saw portfolio gains, most notably through success in our first competitive licencing round, with the acquisition of the Crown Discovery in UK Licencing Round 30. 2018 also saw additional strengthening of our technical and corporate team, as we gear up to take full advantage of what is an increasingly strong asset base. The progress made last year builds on United's already strong start and has been continued into 2019."

2018 operational highlights:

· Italian discovery at Podere Gallina with a potential 150,000 cubic meters per day production on track for Q3 2020, planning to deliver significant cash flow to fund future growth

· Farm into UK licences in Wessex Basin including Colter

· UK licencing round success as Crown Discovery added to portfolio

· Successful seismic campaign in Jamaica on the highly prospective Walton Morant licence de-risks multiple targets

Post Year-end:

· Key milestone achieved with United's first reserves booked with 2.7BCF of 2P reserves of gas attributable to the 20% interest in the Selva Gas Field in Italy

· Promising drilling campaign in Colter

· Competent Persons Reports across portfolio give clear demonstration of asset strength

· Move to AIM

· Benin licence acquisition marks entry into exciting African market

Extracts from the Company's Annual Report and Financial Statements for the year ended 31 December 2018 are set out below and this information does not constitute the Company's statutory accounts for the year ending 31 December 2018. The financial information for 2017 is derived from the statutory accounts for that year.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For more information please visit the Company's website at www.uogplc.com or contact: 

Notes to Editors

United Oil & Gas plc (UOG) is an AIM-traded company. United was established to explore, appraise and develop low risk assets in Europe and to develop higher risk, higher impact exploration projects in the Caribbean, Latin America and Africa.

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 December 2018

Introduction

I am very pleased to present to you this annual report of United Oil & Gas plc for the year to 31st December 2018. I mentioned in last year's report that on joining the company I was impressed with the energy and enthusiasm of the management team and the company's extensive activities in 2018 have certainly demonstrated their commitment once again.

Strategy

The company has a clear and focussed strategy which is to build a portfolio of low-risk assets in Europe to underpin and complement the addition of high impact growth opportunities elsewhere, with a particular focus on Latin America, the Caribbean and Africa, each being areas where the management have previous experience and a network of industry links. 2018 was a very active year in the pursuit of that strategy.

Key activities in 2018

In Italy, the company announced a significant gas discovery in the Podere Gallina licence in the Po Valley which underpins a potential 150,000 cubic metres per day production facility for which a development planning application was submitted and is being processed. The outcome of the elections in Italy slightly delayed the application but the project is on track for first Gas in the third Quarter of 2020, and we are optimistic this will lead to a significant revenue stream for the company, at which point the company's portfolio will contain assets at each stage of the oil and gas lifecycle.

In the UK, in early 2018 the company farmed in to Licence P1918 in the Wessex Basin and later in the year participated in the Colter appraisal well. As is often the case with oil and gas exploration the results of the well surprised and disappointed at the same time in that a new and unexpected discovery was made at Colter South while the original target at Colter North was smaller than pre-drill estimates. However, in terms of the overall Colter prospect the company's commerciality threshold was exceeded and evaluation is ongoing as to the most appropriate way forward.

Also in the UK, we were delighted with our success in the 30th licensing round with the award of two blocks in the UK Central North Sea containing multiple leads and targets including the Crown discovery.

In Jamaica, in the Tullow-operated Walton Morant licence, which is one of our high impact areas, we completed the 3D seismic acquisition the results of which de-risked a number of the existing targets, including Colibri. In conjunction with Tullow we began the process of opening a data room and inviting suitable industry partners to farm-in and join us in the next, drilling phase of the licence.

Work continued throughout the year on our other assets while at the same time the management team reviewed a considerable number of potential new ventures, some of which are still under consideration. It is a testament to the growing reputation of the company's entrepreneurial management team that the company is being invited to participate in more and more opportunities.

Capital raising

In support of our work programmes and potential new ventures we carried out two fundraisings during the year. In April 2018 we raised £2.5 million at 4.25p and in September 2018 we raised £3million at 5.5p (with warrants at 8p).

We are very grateful for the support shown to the company by our existing shareholders in approving those fundraisings and of course by our new shareholders who we welcome to the company and hope to meet in due course at one of our shareholder events.

Financial Results for 2018

As expected at this stage in the company's history with no cash flow yet from operations the company made a loss for the year. This loss of £810,987 principally comprises administrative expenditure in support of the company's activities, exploration costs associated with new ventures and evaluating acquisition opportunities incurred during the year, and the corporate expenses associated with being a listed company including fundraising expenses.

Key events since year end

The company has had an impressive start to 2019 and its activities on existing operations and new ventures have continued at the same hectic pace.

A considerable amount of management time was taken up in the administration around the move to AIM in March 2019, a move which the Board believe is appropriate and timely and which will better suit the company's growth ambitions.

The Colter well was completed in early 2019, the results of which are still being evaluated. New competent person's reports have been announced in respect of UOG Jamaica Ltd, UOG Italia Srl, UOG Crown Ltd. and UOG PL090 Ltd., in each case materially adding to the company's existing unrisked resources, and the company acquired an option to make a new strategic low cost entry into Benin with transformative upside.

Conclusion

I believe 2018 was another very successful year for the company in the development and pursuit of our strategy and on your behalf I would like to record our thanks to our small but dedicated management team for their continued commitment and energy, and I look forward with confidence to an equally successful 2019.

Graham Martin

Chairman

Consolidated Income Statement for the year ended 31 December 2018

Consolidated Statement of Total Comprehensive Income

Consolidated Balance Sheet as at 31 December 2018

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows for the year ended 31 December

Notes to the consolidated financial statements

Selected notes from the financial statements are set out below without amendment to the note reference. The full notes are contained in the Audited Annual Report and Accounts.

1. Segmental reporting

Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources, assessing the performance of the operating segment and making strategic decision, has been identified as the Board of Directors. The Board of Directors consider that the Group has only one operating segment at corporate level, being the exploration and evaluation of oil and gas prospects, therefore no additional segmental information is presented.

The Group operates in three geographic areas - the UK, other EU and Latin America. The Group's revenue from external customers and information about its non-current assets (other than financial instruments, investments accounted for using the equity method, deferred tax assets and post-employment benefit assets) by geographical location are detailed below.

2. Operating loss

3. Directors and employees

The aggregate payroll costs of the employees, including both management and Executive Directors, were as follows:

Average monthly number of persons employed by the Group during the year was as follows:

Key management personnel are identified as the Executive Directors.

No share warrants have been exercised by any of the directors, nor have any payments of pensions contributions been made on behalf of directors in any of the periods presented.

4. Taxation

The Group has accumulated tax losses of approximately £1,590,000 (2017: £780,000). No deferred tax asset was recognised in respect of these accumulated tax losses as there is insufficient evidence that the amount will be recovered in future years.

5. Loss per share

The Group has issued share warrants and options over Ordinary shares which could potentially dilute basic earnings per share in the future. Further details are given in note 12.

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.Due to the losses incurred during the year, a diluted loss per share has not been calculated as this would serve to reduce the basic loss per share. There were 93,329,853 (2017: 37,260,000) share warrants and options outstanding at the end of the year that could potentially dilute basic earnings per share in the future.

Basic and diluted loss per share

The loss and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

6. Subsidiaries

Details of the Group's subsidiaries in 2018 are as follows:

*held indirectly by United Oil & Gas

7. Intangible assets

United Oil and Gas farmed into a UK licence in the Wessex basin with Corallian Energy Limited in January 2018, in which the Colter well was drilled in Q1 2019. The costs incurred and capitalised to 31 December 2018 are £287,900.

In May 2018 United Oil & Gas plc was awarded two blocks in the UK North Sea's 30th licensing round, which includes the Crown discovery and to 31 December 2018 the company has incurred costs of £96,744. The current work programme consists of Seismic reprocessing and Rock physics, and we continue the farm out process ahead of a well decision later in 2019.

In UOG Italia Srl well drilling and testing was completed at Podere Gallina in the first quarter of 2018. To 31 December 2018 the company has capitalised costs of £1,709,135 and development activities are on track for 2019 after the Italian Ministry granted the Joint Venture an exploitation licence in January 2019

UOG Jamaica Ltd activity consisted primarily of the 3D Seismic acquisition on the Walton-Morant licence with our partners Tullow Oil, and to 31 December 2018 the company has capitalised costs of £1,703,027.

Activities have continued on our UK asset with Egdon Resources on the Waddock Cross licence and to 31 December 2018 the company have capitalised costs of £298,909. The first well to be drilled is targeted for the second half of 2019.

Management review the intangible exploration assets for indications of impairment at each balance sheet date based on IFRS 6 criteria. Commercial reserves have not yet been established and the evaluation and exploration work is ongoing. The Directors do not consider that any indication of impairment have arisen and accordingly the assets continue to be carried at cost.

8. Property, plant and equipment

Depreciation is recognised within administrative expenses.

9. Trade and other receivables

No receivables are past due or impaired at 31 December 2018 or 31 December 2017.

10. Cash and cash equivalents

At 31 December 2018 and 2017 all significant cash and cash equivalents were deposited in the UK and Ireland with large international banks.

11. Share capital, share premium and merger reserve

Allotted, issued, and fully paid:

As regards income and capital distributions, all categories of shares rank pari passu as if the same constituted one class of share.

Merger reserve

Following the reverse takeover of Senterra Energy Plc (subsequently renamed United Oil & Gas Plc) on 31 July 2017, the results of this entity were combined with those of the UOG Holdings plc group on a merger accounting basis.

The merger reserve arising on consolidation is effectively the difference between the fair value of consideration from the share for share exchange less the net assets at the time and is calculated as shown below.

The merger reserve in the year ended 31 December 2017 is made up as follows:

12. Share-based payments

Options

Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are as follows:

The fair values of share options issued in the current financial year were calculated using the Black Scholes model as follows:

Expected volatility was determined based on the historic volatility of the Company's shares for a period averaging 1 year. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Group recognised total expenses of £48,845 in the income statement in relation to share options accounted for as equity-settled share-based payment transactions during the year in relation (2017: £nil).

Warrants

Details of the number of share warrants and the weighted average exercise price (WAEP) outstanding during the year are as follows:

The fair values of share warrants issued or extended in the current financial year were calculated using the Black Scholes model as follows:

Expected volatility was determined based on the historic volatility of a comparable company's shares for a period averaging 1 year. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Group recognised total expenses of £610,299 in relation to share warrants accounted for as equity-settled share-based payment transactions during the year in relation (2017: £455,492). These were recognised as follows:

£610,299 (2017: £47,582) as a deduction from share premium related to share warrants accounted for as equity-settled share-based payment transactions during the year.

£nil (2017: £25,377) in relation to the combination of United Oil & Gas (formerly Senterra Energy plc) with the UOG Holdings plc group - recognised as expenses in the income statement.

£nil (2017: £382,533) as cost of investment in subsidiary held by United Oil & Gas arising on the formation of the new group structure, and thus results in an increase in the merger reserve recognised in the group consolidation (see Statement of Changes in Equity).

13. Trade and other payables

14. Deferred shares

On 12 October 2015, the Company issued 30,000 Deferred Shares of £1 for £30,000 to the Founder, which have an entitlement to a non-cumulative annual dividend at a fixed rate of 0.1 per cent of their nominal value. The Deferred Shares have no voting rights attached to them, and may be redeemed in their entirety by the Company for an aggregate redemption payment of £1.

15. Financial instruments

Categories of financial instruments

The tables below set out the Group's accounting classification of each class of its financial assets and liabilities.

All of the above financial assets' carrying values are approximate to their fair values, as at 31 December 2018 and 2017.

In the view of management, all of the above financial liabilities' carrying values approximate to their fair values as at 31 December 2018 and 2017.

Fair value measurements

This note provides information about how the Group determines fair values of various financial assets and financial liabilities.

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values (due to their nature and short times to maturity).

16. Financial instrument risk exposure and management

The Group's operations expose it to degrees of financial risk that include liquidity risk, credit risk, interest rate risk.

This note describes the Group's objectives, policies and process for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented in notes 9, 10, 13, 14, 15 and 17.

Liquidity risk

Liquidity risk is dealt with in note 17 of these financial statements.

Credit risk

The Group's credit risk is primarily attributable to its cash balances.

The credit risk on liquid funds is limited because the third parties are large international banks.

The Group's total credit risk amounts to the total of other receivables and cash and cash equivalents.

Interest rate risk

The Group's only exposure to interest rate risk is the interest received on the cash held on deposit, which is immaterial. The Group does not have any borrowings.

Foreign exchange risk

The Group's transactions are carried out in GBP, EUR and USD. Fundraising transactions and parent company operating transactions are carried out in GBP. Operational transactions are carried out predominantly in EUR but also in USD.

Exposures to foreign currency exchange rates arise from the Group's overseas sales and purchases, which are denominated in a number of currencies, primarily EUR and USD. Cash balances held in these currencies are relatively immaterial (see note 10) and transactional risk is considered manageable.

The Group does not hold material non-domestic balances and currently does not consider it necessary to take any action to mitigate foreign exchange risk due to the immateriality of that risk.

17. Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash balances to ensure the Group can meet liabilities as they fall due.

In managing liquidity risk, the main objective of the Group is therefore to ensure that it has the ability to pay all of its liabilities as they fall due. The Group monitors its levels of working capital to ensure that it can meet its debt repayments as they fall due. The table below shows the undiscounted cash flows on the Company's / Group's financial liabilities as at 31 December 2018 and 2017, on the basis of their earliest possible contractual maturity.

17. Liquidity risk (continued)

Other payables comprise loans from directors which are repayable on demand.

18. Capital management

The Group's capital management objectives are:

· To ensure the Group's ability to continue as a going concern; and

· To provide long-term returns to shareholders

The Group defines and monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the balance sheet and as follows:

The Board of Directors monitors the level of capital as compared to the Group's commitments and adjusts the level of capital as is determined to be necessary by issuing new shares. The Group is not subject to any externally imposed capital requirements.

These policies have not changed in the year. The Directors believe that they have been able to meet their objectives in managing the capital of the Group.

19. Related party transactions

Key management personnel are identified as the Executive Directors, and their remuneration is disclosed in note 3.

Loan from director

The loan balance was repayable on demand with no formal terms.

20. Financial commitments

As at 31 December 2018, the Group's commitments comprise their exploration expenditure interests in Waddock Cross, Crown, Colter, Po Valley and the Walton-Morant licence, and an office lease. These commitments have been summarised below:

Land & Buildings

Office Space £60,754 -

21. Ultimate controlling party

The directors do not consider there to be an ultimate controlling party.

22. Events after the balance sheet date

(i) On 1 March 2019 the Company announced its admission to trading on AIM. No additional capital has been raised upon admission.

(ii) The Colter Well 98/11a-6, situated in the UK Wessex Basin was spudded on 6th February 2019, targeting the fault-block immediately to the south of Wytch Farm. The initial borehole didn't intersect the targeted structure, but made an unexpected new discovery at Colter South. The well was then sidetracked, but the targeted Sherwood Sandstone reservoir section came in below the Oil Water Contact of the 98/11-3 well, suggesting the original Colter structure is smaller than pre-drill estimates. However, the sidetrack found strong shows in the shallower Jurassic section, with encouraging implications for prospectivity along strike. Volumetric evaluation of both the Colter and Colter South structures are underway. The operator, Corallian Energy carried pre-drill recoverable volumes of 15mmbbls for Colter South - likely to be a conservative estimate. The most recent estimated final costs of drilling at Colter to UOG, including the additional sidetrack are circa £1.35m.

(iii) United Oil & Gas Plc has signed an option agreement in March 2019 with Elephant Oil Ltd ("Elephant") to farm in to their Block B onshore acreage in Bénin, potentially taking a 20% interest in the production sharing agreement ("PSC"). 

Under the farm in option agreement, the company have agreed to fund passive seismic and field studies up to a value of $175k. The completion of the passive seismic programme was completed April. The goal of the proposed work programme will be to calibrate the depth to basement and obtain further information on the oil and gas seeps. This will further de-risk maturity and migration in the area ahead of the completion of a final decision to exercise the farm in option.

If United chooses to exercise the option, then the Company will farm into the PSC for a 20% interest and will be responsible to fund 30% of the non-drilling and 20% of the drilling costs in the Phase 1 work programme as approved under the PSC. United would also pay Elephant the sum of US$260,000, representing one quarter of the pro rata (20%) past costs expended by Elephant on the prospect, with the remaining US$780,000 paid in three equal six monthly instalments.

Company Balance Sheet as at 31 December

Company Statement of Changes in Equity

The notes to these financial statements form an integral part of these financial statements. 

Notes to the Parent Company Financial Statements

for the year ended 31 December 2018

1. Accounting Policies

Basis of Preparation

The annual financial statements of United Oil & Gas (the Parent Company financial statements) have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements ("FRS 100") and Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101").

Disclosure exemptions adopted

In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore, these financial statements do not include:

· certain disclosures regarding the company's capital;

· a statement of cash flows;

· the effect of future accounting standards not yet adopted;

· the disclosure of the remuneration of key management personnel; and

· disclosure of related party transactions with the Company's wholly owned subsidiaries.

In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the Company's Consolidated Financial Statements. These financial statements do not include certain disclosures in respect of:

· Financial instruments (other than certain disclosures required as a result of recording financial instruments at fair value)

· Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value)

· Related party transactions

· Share-based payments

As permitted by section 408 of Companies Act 2006, a separate Income Statement for the Company has not been included in these financial statements. The Company's loss for the year ended 31 December 2018 was £522,326 (2017: £497,087).

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and the Strategic Report.

The group will continue to manage its working capital, by closely managing all costs. The group expects that it will require additional funding within the next 12 months, therefore the group will consider additional capital to fund acquisition opportunities along with future development projects that are currently within the existing asset base. The company will consider the optimum time for any capital funding depending on the commercialisation and funding of its existing assets. The directors anticipate shareholder support with any capital funding and have raised regular financing successfully in the past.

There is however a material uncertainty related to the conditions above that may cast significant doubt on the Group's ability to continue as a going concern, however the Directors have a reasonable expectation that the group will continue to finance its operational existence from the equity market, portfolio divestments and the debt market, therefore, they continue to adopt the going concern basis of accounting in preparing the financial statement.

Investments

Fixed asset investments are stated at cost. Investments are tested for impairment when circumstances indicate that the carrying value may be impaired.

Impairment of non-financial assets

At each balance sheet date, the Directors review the carrying amounts of the Company's tangible and intangible assets, other than goodwill, 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 Company 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 or cash-generating unit is reduced to its recoverable amount. If the recoverable amount of a cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.

An impairment loss is recognised as an expense immediately.

An impairment loss recognised for goodwill is not reversed in subsequent periods.

Where an impairment loss subsequently reverses, the carrying amount of the asset or 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 or cash-generating unit in prior periods. A reversal of an impairment loss is recognised in the Income Statement immediately.

Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs. Financial assets and financial liabilities are measured subsequently as described below.

Financial assets

The Company classifies its financial assets as 'loans and receivables'. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables are classified as 'trade and other receivables' in the Balance Sheet.

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.

Financial liabilities

The Company's financial liabilities include trade and other payables.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Current taxation

Current taxation is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the balance sheet date and includes adjustments to tax payable or recoverable in respect of previous periods.

Deferred taxation

Deferred taxation is calculated using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised, or the deferred tax liability is settled.

Deferred tax liabilities are provided in full.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit or loss, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Foreign currency

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the year-end date. All differences are taken to the Income Statement.

Share-based payments

Where share-based payments (warrants and options) have been issued, IFRS 2 has been applied whereby the fair value of the share-based payment is measured at the grant date and spread over the vesting period. A valuation model is used to assess the fair value, taking into account the terms and conditions attached to the share-based payments. The fair value at grant date is determined including the effect of market based vesting conditions, to the extent such vesting conditions have a material impact.

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