TIDMANR
Embargoed until
7am
19
December 2017
Altona Energy plc
("Altona" or "the Company")
Final Results
Altona (AIM: ANR), a coal exploration company in South Australia, announces its
audited results for the year ended 30 June 2017 and that its Annual General
Meeting is to be held at 30 Percy Street, Fitzrovia, London W1T 2DB on
Wednesday 10 January 2018 at 11.30 am.
Highlights (post period end)
* Commissioned Strategic Report to identify suitable areas on the Company's
tenements for coal extraction
* Placings raised a total of GBP1,095,000 before expenses
* Henry Kloepper appointed to the Board as a non-Executive Director
* Nick Lyth and Phil Sutherland appointed as Chief Executive and Operations
Director (Australia) respectively
* Refocusing of the business on conventional coal extraction
* Administrative expenses reduced by GBP424,000 to GBP341,000 for the year ended
30 June 2017
Nick Lyth, CEO of Altona, commented, "I am delighted to be able to report to
shareholders that Altona has a focused strategy for the identification of
suitable coal deposits for conventional extraction and sufficient funding to
prosecute the initial phases of the exploration process. The target is to
proceed with exploration only in areas which we believe have a high probability
of delivering suitable coal deposits. In doing so, we de-risk the opportunity
with a view to a profitable exit once the necessary exploration phases have
been completed. The reconstituted Board is motivated to deliver this strategy
and, in doing so, deliver value to our shareholders."
For further information, please visit www.altonaenergy.com or contact:
Altona Energy plc
Nicholas Lyth, Chief Executive Officer +44 7769 906 686
Leander (Financial PR)
Christian Taylor- Wilkinson +44 7795 168 157
Northland Capital Partners Ltd (Nomad and
Broker) +44 20 3861 6625
Matthew Johnson / Gerry Beaney (Corporate
Finance)
John Howes (Corporate Broking)
About Altona Energy
Altona is listed on the London Stock Exchange's AIM market. Its principal
focus is on the evaluation and development of the Company's flagship Arckaringa
Project to exploit the significant coal resources contained in three
exploration licences covering 2,500 sq. kms in the northern portion of the
Permian Arckaringa Basin in South Australia. The Project is designed to
produce either coal or syngas products for the Australian market and export
from an historic resource exceeding 7.8 billion tonnes of coal (1.3 billion
tonnes historic JORC (2004) compliant).
CHIEF EXECUTIVE OFFICER'S STATEMENT
Overview
The Group's strategy remains focused on its investment in the Arckaringa
Project, South Australia, a world class coal resource exceeding 7.8 billion
tonnes (1.3 billion tonnes historic JORC compliant) and we continue to have the
support of the South Australian Government's Mining Department, with whom we
work closely.
As a result of Altona being unable to secure the necessary Petroleum
Exploration Licence ("PEL") required to pursue an Underground Coal Gasification
("UCG") strategy, the Board agreed, at the end of reporting period, to refocus
on conventional coal extraction methods. The economics of conventional
extraction have improved considerably in the past 22 months as the price of
coal has almost doubled in that period.
Therefore, in July 2017, the Group formulated a new strategy with its mining
engineering consultants, WSP Australia PTY Ltd ("WSP"); the first step being to
identify coal deposits within its three tenements which would be suitable for
the new strategy.
Review of the Year
On 28 July 2016, the Group announced that it had been informed by the South
Australian Government that in order to commence test drilling for its UCG
project at its Arckaringa site it required a PEL.
Subsequently it was established that an application for the relevant PEL had
been made by another company, Linc Energy Limited ("Linc") which was, at that
time, in administration. The Group made representations to the administrators
[and South Australian government] in an attempt to secure this licence for the
Group.
On 16 May 2017, the Group announced that Tri-Star Petroleum Company Inc
("Tri-Star") had acquired the entire assets from the administrator of Linc,
including the application for PEL 604, which overlaps the Group's own
tenements. The Group began the process of establishing contact with Tri-Star to
establish its intentions for the PEL application.
As a result of the ongoing PEL application no share capital was issued to the
parties referenced in the Joint Venture arrangement and therefore the position
remains unchanged from the prior year.
The current licence applications expired in June 2017 and renewal applications
have been submitted to the South Australian government. The minimum expenditure
commitments in the period were not met. Discussions with the tenement manager
have not indicated an issue with licence renewal.
Negotiations ended in early July 2017 with the Group unable to purchase the
licence application from Tri-Star.
Post Balance Sheet Events
On 10 August 2017, the Board announced a change in its strategy, following
discussions with WSP, to focus on a conventional coal extraction project for
the exploitation of its coal assets at Arckaringa.
WSP was engaged to produce a desk top report based on historic data and
findings at the three tenements owned by the Group. The report was to establish
the existence of "dry" coal deposits within the Wintinna, Murloocoppie and
Westfield tenements, or if found not to be economically viable, then to
investigate the probability of low environmental impact "less dry" or "wet"
coal deposits which could be used for the production of electricity and/or
ethanol or methanol. WSP were also tasked with recommending the size of power
plant (MW capacity) that would be needed to make the project commercially
viable and the coal capacity required.
The Group advised its shareholders on 25 September 2017 that the findings of
the report were inconclusive and that a further, more focused report would be
needed. This report was subsequently commissioned, and the Group also engaged
the services of Runge Pinock Minarco Global ("RPM"), a specialist professional
mining consultant with previous experience of the coal deposits at the
Arckaringa site. Initially, the report was to concentrate on the Group's
Westfield tenement, using seismic, water table and other data to provide
accurate analysis and mapping ahead of a possible drilling programme, and on 30
November 2017, the report was expanded to explore areas of the Wintinna and
Murloocoppie tenements, which are known to be potentially prospective for
accessible coal.
Technical Report
Extensive and thick Permian coal exists in a number of geological basins in
South Australia including the Arckaringa Basin. Permian coals range from being
deeply buried in some basins (from 1,110m) to mineable depths (from 30m depth)
in the Arckaringa Basin which is the focus of the Group. The Arckaringa Basin
contains an estimated 10 billion tonnes of coals. Within the basin the Group
has control of three deposits (tenements). Historic exploration has revealed
the following:
Wintinna Deposit - Thickness of overburden to top coal seam ranges are 220m to
300m. Six to seven flat lying coal seams have been delineated, with a
cumulative thickness of 20m over a stratigraphic interval of 60m.
Murloocoppie Deposit - Eight persistent seams within a 70m stratigraphic
interval are recognised. Cumulative coal thickness averages 20m with
overburden to the top of mineable coal varying between 140m and 230m.
Westfield Deposit - Two persistent seams occur about 30m apart. The upper seam
ranges in thickness from 6m to 9m and occurs at depths between 145m and 215m.
The lower seam averages 1m to 2m in thickness.
Current Group efforts are focused on identifying dry coal or 'less wet' coal at
mineable depths. When the Group has identified coal suitable for extraction,
the evaluation of the coal quality and location will inform the Group's
decision making on a 'best return on investment' and low environmental impact
basis in respect to the method of extraction.
Group decisions will also be informed by the infrastructure necessary to
process the coal either at surface/on-site or transport coal to market for use
elsewhere. Coal characteristics requiring consideration include coal seam
depth, thickness, continuity, maturity, vertical distance to aquifers, organic
(maceral) content, gas content indications based on water geochemistry, and
coal seam permeability. In respect of moving coal product to market the three
Group tenements are fortunately in close proximity to road and rail (north and
south of the continent) transport infrastructure.
The type of extraction and post-extraction use of the coal will be driven by
market demand and prices. It is noted that the price of coal has increased
over the last 12 months and appears to be sustainable. A conventional coal
mining technique (as opposed to a non-conventional technique) is most likely to
be selected by the Group to undertake the extraction of the coal. In this
respect open pit coal mining is the least costly, most timely and least
technically problematic. Subjecting the coal to a coal conversion technology
(at surface) including gasification to produce one or more products such as
oil, diesel, jet fuel, gas, fertilizer and road slurry will all be considered
based on their economics. Extracting and transporting the coal to market
without processing will also be considered.
Unconventional mining techniques such as Underground Coal Gasification (UCG)
and Coal Seam Methane (CSM) are unlikely now to be considered by the Company as
they are early stage technologies and subject to a number of environmental and
other problems. The Company at this time does not have the licences necessary
to explore for coal for these purposes.
Board Changes
Henry Kloepper was appointed as a Non-Executive Director on 3 November 2017,
bringing to the Board a wealth of experience in the resources sector over a 30
year career.
Nick Lyth was made Chief Executive Officer and Phillip Sutherland was made
Director of Operations (Australia) on 23 November 2017. On the same day,
options were granted to the members of the board under two performance
indicators; the first being when the share price reaches 2.5 pence; the second
being split into two tranches, when the Group commences a drilling programme
and when it completes a pre-feasibility study. Both indicators provide high
incentive to the Company to succeed in its new strategy.
Financial Review
During the period under review the Group made a loss before taxation of GBP
341,000 (2016: profit GBP38,000, due to a reversal of a provision against a
former director's tax liability of GBP790,000). Like for like the Group reduced
losses by GBP411,000, mainly due to the decrease in administrative expenses to GBP
341,000 (2016: GBP765,000).
As at 30 June 2017, the Group had cash of GBP15,000 (2016: GBP362,000).
After the year end, the Group raised GBP1,095,000 through three separate placings
as follows: on 7 July it raised GBP150,000 at a price of 0.15p per share, on 13
October it raised GBP210,000 at a price of 0.05p per share, and on 23 November it
raised GBP735,000, before expenses, at a price of 0.5p per share.
Outlook
Altona is a small company with a potentially very large coal asset and the
Board is now embarked on a tight and focused strategy to identify and exploit
this asset in 2018. Starting with further exploration in new areas of the
tenements for which renewal applications have been made, the Group hopes to
take advantage of the high coal price, by proving-up its plan in order to
provide a possible exit within a reasonable time frame. The Board will visit
Adelaide in January 2018 to meet with the South Australian government and WSP
to discuss the exploration programme and planned expenditure for the project.
The Board expects the costs of the initial exploration phase to be kept to a
practical level. The Company will work together with WSP to estimate cost
levels for a modest open pit mining operation with the capacity to scale-up
operations in the future.
The South Australian region has for some time now, had issues with its regional
power supply. Although there has been a trend towards renewable power in
recent years, this is starting to lose momentum as it has not provided the same
reliable base load support as fossil fuels are able to do.
Therefore, the Board remains confident that a significant asset such as
Arckaringa would be given high priority by the government, who remains
supportive of Altona's project, in order to provide a long-term energy supply
for the region.
Nick Lyth
Chief Executive Officer
18 December 2017
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
For the year ended 30 June 2017
Group
Notes 2017 2016
GBP'000 GBP'000
Revenue - -
Administrative expenses (341) (765)
Reversal of provision - 790
Operating (loss) / profit 4 (341) 25
Finance income - 1
(Loss) / profit before taxation (341) 26
Tax credit 7 - 12
(Loss) / profit for the year attributable to the (341) 38
equity holders of the parent
Other comprehensive income
Exchange differences on translating foreign operations 537 1,471
that may be subsequently reclassified to profit or
loss
Total comprehensive income attributable to the equity 196 1,509
holders of the parent
Earnings per share (expressed in pence per share) (0.04)p 0.005p
- Basic attributable to the equity holders of the 6
parent
- Diluted attributable to the equity holders of the 6 (0.04)p 0.005p
parent
All of the above operations during the year are continuing.
STATEMENTS OF FINANCIAL POSITION
As at 30 June 2017
Notes Group Group Company Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 8 11,801 11,221 - -
Investment in subsidiaries 9 - - 1,432 1,432
Other receivables 10 3 3 10,772 10,712
Total non-current assets 11,804 11,224 12,204 12,144
Current assets
Trade and other receivables 10 14 17 13 16
Cash and cash equivalents 15 362 10 357
Total current assets 29 379 23 373
TOTAL ASSETS 11,833 11,603 12,227 12,517
LIABILITIES
Current liabilities
Trade and other payables 11 102 68 95 55
Total current liabilities 102 68 95 55
TOTAL LIABILITIES 102 68 95 55
NET ASSETS 11,731 11,535 12,132 12,462
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
Share capital 12 892 892 892 892
Share premium 12 18,178 18,178 18,178 18,178
Merger reserve 2,001 2,001 2,001 2,001
Foreign exchange reserve 1,986 1,449 - -
Retained deficit (11,326) (10,985) (8,939) (8,609)
TOTAL EQUITY 11,731 11,535 12,132 12,462
The loss within the parent company financial statements for the year was GBP
330,000 (2016: profit of GBP1,738,000)
STATEMENTS OF CASH FLOWS
For the year ended 30 June 2017
Group Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from Operating
activities
(Loss)/profit for the year before (341) 26 (330) 1,738
taxation
Income tax - 12 - -
Finance income - (1) - (1)
Share based payments - 18 - 18
Foreign exchange on loans to controlled (43) - - (1,592)
entities
Decrease in receivables 3 43 3 42
Increase/(decrease) in payables 34 (40) 40 (40)
Decrease in provisions - (790) - (790)
Cash used in operations (347) (733) (287) (625)
Income tax benefit received - 63 - -
Net cash used in operating activities (347) (670) (287) (625)
Cash flows from Investing
activities
Loans to subsidiaries - - (60) (28)
Interest received - 1 - 1
Net cash generated from/(used in) - 1 (60) (27)
investing activities
Cash flows from Financing
activities
Proceeds from issue of shares - 500 - 500
Net cash inflow from financing - 500 - 500
Net decrease in cash and cash equivalents (347) (169) (347) (152)
Cash and cash equivalents at beginning of 362 543 357 509
the year
Effect of exchange rate changes on cash - (12) - -
and cash equivalents
Cash and cash equivalents at 30 June 15 362 10 357
STATEMENTS OF CHANGES IN EQUITY
For the year ended 30 June 2017
Attributable to equity holders of the parent
Share Share Merger Foreign Retained Total
capital Premium reserve exchange deficit equity
reserve
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2015 792 17,778 2,001 (22) (11,041) 9,508
Profit for the year - - - - 38 38
Other comprehensive income - - - 1471 - -
Total comprehensive income - - - 1,471 38
1,509
Issue of share capital 100 400 - - - 500
Share based payments - - - - 18 18
Total transactions with 100 400 - - 18 518
owners, recognised
directly in equity
Balance at 30 June 2016 892 18,178 2,001 1,449 (10,985) 11,535
Profit/(loss) for the year - - - - (341) (341)
Other comprehensive income - - - 537 - 537
Total comprehensive income - - - 537 (341) 196
Balance at 30 June 2017 892 18,178 2,001 1,986 (11,326) 11,731
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July 2015 792 17,778 2,001 - (10,365) 10,206
Profit for the year - - - - 1,738 1,738
Other comprehensive income - - - - - -
Total comprehensive income - - - - 1,738 1,738
Issue of share capital 100 400 - - - 500
Share based payments - - - - 18 18
Total transactions with 100 400 - - 18 518
owners, recognised directly
in equity
Balance at 30 June 2016 892 18,178 2,001 - (8,609) 12,462
Loss for the year - - - - (330) (330)
Other comprehensive income - - - - - -
Total comprehensive income - - - - (330) (330)
Balance at 30 June 2017 892 18,178 2,001 - (8,939) 12,132
The following describe the nature and purpose of each reserve within owners'
equity:
Reserve Description and Purpose
Share capital Amount subscribed for share capital at nominal value
Share premium Amount subscribed for share capital in excess of nominal value.
Merger reserve Reserve created on issue of shares on acquisition of
subsidiaries in prior years.
Foreign exchange Cumulative translation differences of net assets of
reserve subsidiaries.
Retained deficit Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
GENERAL INFORMATION
Altona Energy PLC is a public company which is listed on the Alternative
Investment Market ('AIM') and is incorporated and domiciled in England & Wales,
with registered number 05350512. The Group's and Parent Company's financial
statements for the year ended 30 June 2017 were authorised for issue by the
Board on 18 December 2017 and the Statements of Financial Position were signed
on the Board's behalf by Mr Nicholas Lyth.
The principal activity of the Company during the year was that of a holding
company for a group engaged in the identification, evaluation, acquisition and
development of the Ackaringa coal project in South Australia.
The principal accounting policies are summarised below. They have been applied
consistently throughout the year. The financial statements have been prepared
on the historical cost basis.
BASIS OF PREPARATION
The financial statements are presented in Sterling, being the presentational
currency of the Group and the functional and presentational currency of the
Company. All values are rounded to the nearest thousand pounds (GBP'000) unless
otherwise stated.
These financial statements have been prepared in accordance with IFRS as
adopted for use in the European Union (EU), and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) as if
they formed a single entity. Control is achieved when the Group is exposed, or
has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
* The contractual arrangement with the other vote holders of the investee;
* Rights arising from other contractual arrangements; and
* The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated from the date that
control ceases. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated
financial statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
When necessary, amounts reported by subsidiaries have been adjusted to conform
with the Group's accounting policies.Transactions and balances between group
companies are eliminated in full.
BUSINESS COMBINATIONS
Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The cost of a business combination is measured as the
aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the Group in
exchange for control of the acquiree. The acquiree's identifiable assets,
liabilities and contingent liabilities that meet the conditions for recognition
under IFRS 3 Revised Business Combinations are recognised at their fair values
at the acquisition date.
FOREIGN CURRENCIES
The presentation currency of the Group is UK Pounds Sterling. The functional
and presentation currency of the Company is UK Pounds Sterling whereas the
functional currencies of all other subsidiaries is Australian Dollars.
Transactions entered into by Group entities in currency other than the currency
of the primary economic environment in which they operate (the "functional"
currency) are recorded at rates ruling when the transactions occur. Foreign
currency monetary assets and liabilities are translated at the rates ruling at
the reporting date.
Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date
of the transaction.
On consolidation, the results of the operations are translated into Pounds
Sterling at average rates approximating to those ruling when the transactions
took place. All assets and liabilities of overseas operations are translated at
the rate ruling at the reporting date. Exchange differences arising on
translating the opening net assets at closing rate are recognised directly in
equity (the "foreign exchange reserve").
Exchange differences recognised in the statement of comprehensive income of
Group entities' separate financial statements on the translation of long-term
monetary items forming part of the Group's net investment in the overseas
operation concerned are reclassified to the foreign exchange reserve if the
item is denominated in the functional currency of the Company or the overseas
operation concerned.
TAXATION
Current and deferred tax is charged or credited in profit or loss, except when
it relates to items charged or credited directly to equity, in which case the
related tax is also dealt with in equity. Current tax is calculated on the
basis of the tax laws enacted or substantively enacted at the reporting date in
the countries where the Company and its subsidiaries operate.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible
temporary differences can be utilised, except for differences arising on
investments in subsidiaries where the Group is able to control the timing of
the reversal of the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of the deferred tax assets is restricted to those instances where
it is probable that a taxable profit will be available against which the
difference can be utilised.
Deferred tax is calculated based on rates enacted or substantively enacted at
the reporting date and expected to apply when the related deferred tax asset is
realised or liability settled.
INTANGIBLE ASSETS - EXPLORATION AND EVALUATION ASSETS
Exploration and evaluation expenditure in relation to each separate area of
interest is recognised as an exploration and evaluation asset in the year in
which it is incurred where the following conditions are satisfied:
i. the rights to tenure of the area of interest are current; and
ii. at least one of the following conditions is also met:
a. the exploration and evaluation expenditure is expected to be recovered
through successful development and exploration of the area of interest,
or alternatively, by its sale, or
b. Exploration and evaluation activities in the area of interest have not,
at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to,
the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include
the acquisition of rights to exploration, studies, exploratory drilling,
trenching and sampling and associated activities and an allocation of
depreciation and amortisation of assets used in exploration and evaluation
activities. General, administrative and share based payment costs are only
included in the measurement of exploration and evaluation costs where they are
related directly to exploration and evaluation activities in a particular area
of interest.
Exploration and evaluation assets are assessed for impairment when facts or
circumstances suggest that the carrying amount of an exploration and evaluation
asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (or the cash-generating unit(s) ('CGU') to
which it has been allocated, being no larger than the relevant area of
interest) is estimated to determine the extent of the impairment loss (if any).
FINANCIAL ASSETS
The financial assets currently held by the Group and Company are classified as
loans and receivables and cash and cash equivalents. These assets are
non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. 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.
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default
or significant delay in payment) that the Group and Company will be unable to
collect all of the amounts due under the terms receivable, the amount of such a
provision being the difference between the net carrying amount and the present
value of the future expected cash flows associated with the impaired
receivable. For receivables which are reported net, such provisions are
recorded in a separate allowance account with the loss being recognised within
administrative expenses in profit or loss. On confirmation that the receivable
will not be collectable, the gross carrying value of the asset is written off
against the associated provision.
Loans and receivables comprise trade and other receivables in the statement of
financial position.
Cash and cash equivalents include cash in hand and amounts held on short term
deposit. Any interest earned is accrued monthly and classified as finance
income. Short term deposits comprise deposits made for varying periods of
between one day and three months.
For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash and cash equivalents as defined above.
Derecognition
Financial assets
The Group and Company derecognise a financial asset when the contractual rights
to the cash flows from the asset expire, or it transfers the asset and
substantially all the risk and rewards of ownership of the asset to another
entity.
FINANCIAL LIABILITIES
The Group and Company classifiy their financial liabilities into one category,
being other financial liabilities.
The Group's accounting policy for the other financial liabilities category is
as follows:
Trade payables and other short-term monetary liabilities are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest method. All interest and other borrowing costs incurred in
connection with the above are expensed as incurred and reported as part of
financing costs in profit or loss.
Derecognition
Financial liabilities
The Group and Company derecognise financial liabilities when, and only when,
the obligations are discharged, cancelled or they expire.
INVESTMENTS IN SUBSIDIARIES
The Company recognises its investments in subsidiaries at cost, less any
provision for impairment. The cost of acquisition includes directly
attributable professional fees and other expenses incurred in connection with
the acquisition. It also includes share based payments issued to employees of
the Company for services provided to subsidiaries.
MERGER RESERVE
The difference between the fair value of an acquisition and the nominal value
of the shares allotted in a share exchange has been treated in accordance with
the merger relief provisions of the Companies Act 2006 and accordingly no share
premium for such transactions was required to be recognised, resulting in a
credit to the merger reserve.
SHARE BASED PAYMENTS
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The equity-settled share-based payments are expensed to profit or loss
or capitalised to investments or intangibles in the statement of financial
position over a straight line basis over the vesting period based on the
Group's estimate of shares that will eventually vest.
Where equity instruments are granted to persons other than employees, the
profit or loss is charged with the fair value of goods and services received
over a straight line basis over the vesting period based on the Group's
estimate of shares that will eventually vest, except where it is in respect to
costs associated with the issue of securities, in which case it is charged to
the share premium account.
JOINT ARRANGEMENTS
Joint arrangements are when there is a contractual arrangement that conifers
joint control over the relevant activities of the arrangement to the Group and
at least one other party. Joint control is assessed under the same principles
as control over subsidiaries.
The Group classifies its interest in joint arrangements as either:
* Joint ventures: where the group has rights to only the net assets of the
joint arrangement;
* Joint operations: where the Group has both the rights to assets and
obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the
following are considered:
* The structure of the joint arrangement;
* The legal form of the joint arrangements structure through a separate
vehicle;
* The contractual terms of the joint arrangement agreement; and
* Any other facts and circumstances (including any other contractual
arrangements).
Interests in joint operations are accounted for by accounting for the assets,
liabilities, revenues and expenses relating to its involvement in a joint
operation in accordance with the relevant IFRSs.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The key assumptions concerning the future and other key judgments at the
reporting date, 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:
1. Impairment of intangibles
The Group follows the guidance of IAS 36 to determine when an intangible asset
is impaired. This determination requires significant judgement. The Group's
current licences for the Arckaringa Project (the Groups' key asset) expired in
June 2017 and, whilst renewal applications have been submitted, the renewal
process is ongoing and formal notification of their renewal has not yet been
received from the South Australia state. Whilst there is no indication at the
date of signing these financial statements that these renewals will not be
successful, there is no absolute certainty of this. As a result management have
exercised their judgement on this matter and continue to carry the intangible
assets within the financial statements at the value of historic exploration and
evaluation costs. Failure to renew the licences may result in a full impairment
of this asset to profit or loss.
2. FINANCIAL INSTRUMENTS - RISK MANAGEMENT
The financial instruments were categorised as Loans and Other Total
follows: receivables financial
liabilities
at amortised
cost
Group 30 June 2017 GBP'000 GBP'000 GBP'000
Assets as per statement of financial position
Trade and other receivables 7 - 12
Cash and cash equivalents 15 - 15
27 - 27
Liabilities as per statement of financial
position
Trade and other payables - 102 102
- 102 102
Group 30 June 2016 Loans and Other Total
receivables financial
liabilities
at amortised
cost
Assets as per statement of financial position GBP'000 GBP'000 GBP'000
Trade and other receivables 2 - 2
Cash and cash equivalents 362 - 362
364 - 364
Liabilities as per statement of financial
position
Trade and other payables - 68 68
- 68 68
Loans and Other Total
receivables financial
Company 30 June 2017 liabilities
at amortised
cost
Assets as per statement of financial position GBP'000 GBP'000 GBP'000
Trade and other receivables 4 - 9
Cash and cash equivalents 10 - 10
19 - 19
Liabilities as per statement of financial
position
Trade and other payables - 95 95
- 95 95
Loans and Other Total
receivables financial
Company 30 June 2016 liabilities
at amortised
cost
Assets as per statement of financial GBP'000 GBP'000 GBP'000
position
Trade and other receivables 2 - 2
Cash and cash equivalents - 357
357
359 - 359
Liabilities as per statement of financial
position
Trade and other payables - 55 55
- 55 55
The Group's financial instruments comprise cash and sundry receivables and
payables that arise directly from its operations.
The main risks arising from financial instruments are credit risk, liquidity
risk and currency risk. The Directors review and agree policies for managing
these risks and these are summarised below. There have been no substantial
changes to the Group's or Company's exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used
to measure them from previous periods unless otherwise stated in this note.
There is no significant difference between the carrying value and fair value of
receivables, cash and cash equivalents and payables.
Credit Risk
Credit risk refers to the risk that a counter party will default on its
contractual obligations resulting in financial loss. The Group has adopted a
policy of only dealing with creditworthy counterparties, as assessed by the
Directors using relevant available information.
Credit risk also arises on cash and cash equivalents and deposits with banks
and financial institutions. The Group's and Company's cash deposits are only
held in banks and financial institutions which are independently rated with a
minimum credit agency rating of A.
There were no bad debts recognised during the year and there is no such
provision required at the reporting date.
Liquidity risk
Liquidity risk arises from the management of working capital. It is the risk
that the Group or Company will encounter difficulty in meeting its financial
obligations as they fall due. Short term payables are classified as those
payables that are due within 30 days. The Group's and Company's policy is to
ensure that it will always have sufficient cash to allow it to meet its
liabilities when they become due. To achieve this aim, it seeks to maintain
liquid cash balances (or agreed facilities) to meet expected requirements for a
period of at least 45 days.
Currency risk
The functional currencies of the companies in the Group are Pounds Sterling and
Australian Dollars. The Group does not hedge against the effects of movements
in exchange rates. These risks are monitored by the Board on a regular basis.
The following table discloses the year end rates applied by the Group for the
purposes of producing the financial statements:
Australian
Foreign currency units to GBP1.00 GBP Dollar
At 30 June 2017 1.69
At 30 June 2016 1.78
The carrying amounts of the Group's foreign currency denominated monetary
assets and monetary liabilities at the reporting date are as follows:
Liabilities Assets
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Australian Dollar 8 14 7 8
The impact of a 20% (2016: 20%) fluctuation in the value of the Australia
Dollar would result in net translation gains or losses of GBP197,187 (2016: GBP
1,200) movement in profit or loss and net assets of the Group.
The only monetary asset the Company has is the intercompany loan. The carrying
amounts of the Company's foreign currency denominated monetary assets and
monetary liabilities at the reporting date are as follows:
Assets
2017 2016
GBP'000 GBP'000
Australian Dollar 12,204 12,144
A 6% (2016: 20%) fluctuation in the value of the Australian Dollar would result
in a positive or negative movement in the Foreign Exchange Reserve of GBP732,000
(2016: GBP2,229,000) in relation to the monetary assets above.
Interest rate risk
The Group and Company finance operations through the issue of equity share
capital.
The Group and Company manages the interest rate risk associated with the Group
and Company cash assets by ensuring that interest rates are as favourable as
possible, whether this is through investment in floating or fixed interest rate
deposits, whilst managing the access the Group and Company requires to the
funds for working capital purposes.
The interest rate profile of the Group's cash and cash equivalents was as
follows:
Pound Australian Total
Sterling Dollar
GBP'000 GBP'000 GBP'000
30 June 2017
Cash at bank floating interest 10 5 15
rate
Pound Australian Total
Sterling Dollar
GBP'000 GBP'000 GBP'000
30 June 2016
Cash at bank floating interest 357 5 362
rate
At the reporting date, cash at bank floating interest rate is accruing weighted
average interest of 0.05% (2016: 0.05%) As required by IFRS 7, the Group has
estimated the interest rate sensitivity on year end balances and determined
that a two percentage point increase or decrease in the interest rate earned on
floating rate deposits would have caused a corresponding increase or decrease
in net income in the amount of GBP300 (2016: GBP7,000).
Capital Management
The Group considers its capital to comprise its ordinary share capital, share
premium and accumulated retained losses as well as the reserves (consisting of
the foreign currency translation reserve and merger reserve).
The Group's objective when maintaining capital is to safeguard the entity's
ability to continue as a going concern, so that it can provide returns for
shareholders and benefits for other stakeholders.
The Company meets its capital needs by equity financing. The Group sets the
amount of capital it requires to fund the Group's project evaluation costs and
administration expenses. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk
characteristics of the underlying assets.
The Company and Group do not have any derivative instruments or hedging
instruments. It has been determined that a sensitivity analysis will not be
representative of the Company's and Group's position in relation to market risk
and therefore, such an analysis has not been undertaken.
Fair values
The fair values of the Group and Company's financial instruments approximate to
their carrying value.
3. REVENUE AND SEGMENTAL INFORMATION
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 and assessing
performance of the operating segment and that make strategic decisions, has
been identified as the Board of Directors. The Group had no revenue during the
period.
During the year ended 30 June 2017 the Group operated in one segment, being the
evaluation of the Arckaringa coal project in South Australia. The Parent
Company serves as an administrative head office and is based in the United
Kingdom. During the year ended 30 June 2017 the Group's operations spanned
Australia and the United Kingdom.
Segment result Segment result
2017 2016
GBP'000 GBP'000
Continuing operations
Coal and Coal to chemicals project 10 (109)
(Australia)
Administration and Corporate (United Kingdom) 330 178
340 69
Finance income - 1
Profit/(Loss) before tax 340 70
Income tax credit - 12
Profit/(Loss) after tax 340 82
The current and prior year share based payment charges are included within the
UK segment result.
Segment assets and liabilities
Non-Current Assets Non-Current
Liabilities
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Coal and Coal to chemicals project 11,804 11,224 - -
(Australia)
Administration and Corporate (United - - - -
Kingdom)
Total of all segments 11,804 11,224 - -
Total Assets Total Liabilities
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Coal and Coal to chemicals project 11,810 11,229 7 13
(Australia)
Administration and Corporate (United 23 374 95 55
Kingdom)
Total of all segments 11,833 11,603 102 68
1. PROFIT/LOSS FROM OPERATIONS
Group
2017 2016
GBP'000 GBP'000
This has been arrived at after charging/(crediting):
Fees payable to the Company's auditor for the audit of the consolidated 16 16
financial statements
Fees payable to the Company's auditor for other services: 4 4
Audit of subsidiaries
Share based payments - Staff and Directors - 18
Share based payments - Consultants - -
Staff costs1/(credit) 213 (367)
1 Included in Staff costs in 2016 is a credit for the reversal of the
PAYE and national insurance provision. Further details on this provision are
included in note 14.
1. STAFF COSTS (INCLUDING DIRECTORS)
Group Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Salaries and fees 210 412 210 412
Release provision for PAYE/NIC - (790) - (790)
Social security costs 3 11 3 11
Total staff costs 213 (367) 213 (367)
The Group and Company averaged 6 employees during the year ended 30 June 2017
(2016: 7 employees). Directors have been assessed as the only key management of
the Group.
Short National Total
term Share insurance
benefits based
payments 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Current Directors:
Qinfu Zhang 98 - - 90 187
Phillip Sutherland 27 - - 24 63
Nicholas Lyth 25 - 3 27 40
Chi Ma 25 - - 24 8
Total Key Management 2017 175 - 3 178 -
Total Key Management 2016 278 17 3 - 298
The total amount payable to the highest paid director in respect of emoluments
was GBP90,000 (2016: GBP187,000). No Directors exercised any share options during
the year. The pension expense relates to compulsory superannuation in
Australia.
1. EARNINGS PER SHARE
The loss for the year attributed to shareholders is GBP341,000 (2016: profit GBP
38,000).
This is divided by the weighted average number of Ordinary shares outstanding
calculated to be 891.9 million (2016: 835.1 million) to give a basic loss per
share of 0.04 pence (2016: basic earnings per share of 0.005 pence).
In the current and prior year there were no potentially dilutive ordinary
shares at the year end because the share price at year end was below the strike
price of the potentially dilutive options and warrants. The potential future
share issues that may dilute the profit/(loss) per share relate to options in
issue disclosed at note 16.
1. TAX
Group
2017 2016
GBP'000 GBP'000
Current taxation
Tax credit - 12
Deferred taxation - -
Total tax credit - 12
Factors affecting the tax charge for the year
(Loss)/profit on ordinary activities (341) 38
before tax
Loss on ordinary activities at the (69) 9
Group standard rate of 20.09% (2016:
22.40%)
Effects of:
Non-deductible expenses - (5)
Difference in overseas tax rates - (8)
Tax concession (research & - 12
development)
Tax losses (utilised)/ carried forward 69 4
Total tax credit for the year - 12
Unprovided deferred tax asset:
Group tax losses carried forward of GBP19,209,000 (2016: GBP
18,868,000) multiplied by the standard rate of corporation tax
20.09% (2016: 22.40%) are recognised when it is probable that 3,841 3,773
sufficient taxable profit will be available in the foreseeable
future. In view of the uncertainty as to future profits, no
deferred tax asset has been recognised as at 30 June 2017 (30
June 2016: nil) due to uncertainty as to when profits will be
generated.
Changes in tax rates and factors affecting the future tax charge
The Finance Act 2016 includes legislation reducing the main rate of UK
corporation tax from 20% to 19% from 1 April 2017.
1. INTANGIBLE ASSETS
Group
2017 2016
GBP'000 GBP'000
Exploration and evaluation
Cost
At beginning of year 11,221 9,739
Currency translation adjustment 580 1,482
Carrying value at 30 June 11,801 11,221
The Group's interest in its Arckaringa Coal Project tenements is held within a
100% owned entity called Arckaringa Coal Chemical Joint Venture Company Pty
Limited ("Joint venture company").
During the year under review, the joint venture company has not issued shares
to the joint venture partners as these partners have not met their capital
contribution requirements obligations. Accordingly at the year-end Altona
continued to own 100% of the shares in the joint venture Company. Because the
shares had not yet been issued to partners as at 30 June 2017, management
consider that the appropriate accounting is to treat the joint arrangement as a
joint operation.
Potential impairment
Intangible assets relate solely to the Arckaringa coal project. Before work can
commence at this project the Exploration Licence must be renewed. In the event
that this is unsuccessful, there may be an indication of impairment of
capitalised expenditure which could significantly reduce the carrying amount of
this asset. As at the date of signing the Financial Statements the Exploration
Licenses are in the process of being renewed following their expiry in June
2017. However, this delay between expiration and renewal has been normal for
the Company in previous years and as such the Directors do not propose any
impairment to the Intangible Assets. Moreover, the Group has recently
undertaken a new strategy, starting with the commissioning of further coal
studies to realise value of the licences.
1. INVESTMENTS IN SUBSIDIARIES
Company
2017 2016
GBP'000 GBP'000
Cost
Investments in subsidiaries - opening and closing balance 1,432 1,432
Subsidiaries of Altona Energy Country of Holding Nature of Business
Plc Registration
2017 2016
% %
Direct
Altona Australia Pty Ltd Australia 100 100 Dormant holding Company
Indirect
Arckaringa Energy Pty Ltd Australia 100 100 Prior year evaluation of the
Arckaringa Project
Arckaringa Coal Chemical Australia 100 100 Current year evaluation of
Joint Venture Co Pty Ltd the Arckaringa Project
1. TRADE AND OTHER RECEIVABLES
Group Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Current
Taxes & Social security receivable 5 7 4 7
Prepayments and other receivables 9 10 9 9
(i)
14 17 13 16
Non-current
Loans due from Group companies (ii) - - 10,772 10,712
Tenement bond 3 3 - -
3 3 10,772 10,712
i. Other receivables are non-interest bearing and generally repayable between
30-60 days. Included within other receivables is an amount for rent deposit
which is refundable upon expiry of the lease.
ii. The loans to wholly owned subsidiaries are non-interest bearing and are
repayable on demand, however payment is not anticipated to be within one
year.
The other receivables remain within their contractual maturity at 30 June 2017
(30 June 2016).
1. TRADE AND OTHER PAYABLES
Group Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 66 37 66 31
Accruals and other payables 36 31 29 24
102 68 95 55
Trade and other payables are non-interest bearing and are normally settled on
terms of 30 days from month end. The trade and other payables remain within
their contractual maturity at 30 June 2017 and 30 June 2016.
1. SHARE CAPITAL
Group Company
Allotted, called up and fully paid 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
891,956,853 ordinary shares of 0.1p 892 892 892 892
each (2016: 891,956,853)
1. SHARE-BASED PAYMENTS
The Company periodically grants share options to employees, consultants and
Directors, as approved by the Board. At 30 June 2017 and 30 June 2016, the
following share options were outstanding in respect of the ordinary shares:
Year ended 30 June 2017
Grant Expiry Number of Issued in Forfeited / Exercised Number of Exercise
Date Date Options Year Expired / in Year Options Price per
Outstanding Cancelled Outstanding Option
at at end of
beginning the year
of the year
28.01.13 28.01.18 4,515,000 - - - 4,515,000 1.50p1
01.04.16 01.04.21 6,500,000 - - - 6,500,000 1.50p3
01.04.16 01.04.21 6,500,000 - - - 6,500,000 1.50p3
17,515,000 - - - 17,515,000
Year ended 30 June 2016
Grant Date Expiry Date Number of Issued in Forfeited / Exercised in Number of Exercise
Options Year Expired / Year Options Price per
Outstanding at Cancelled Outstanding Option
beginning of at end of the
the year year
28.01.13 28.01.18 4,515,000 - - - 4,515,000 1.50p1
08.04.13 08.04.16 4,500,000 - (4,500,000) - - 1.56p1
28.03.14 28.03.19 5,750,000 - (5,750,000) - - 1.50p2
28.03.14 28.03.19 5,750,000 - (5,750,000) - - 3.00p2
01.04.16 01.04.21 - 6,500,000 - - 6,500,000 1.50p3
01.04.16 01.04.21 - 6,500,000 - - 6,500,000 1.50p3
20,515,000 13,000,0000 (16,000,000) - 17,515,000
1 - no vesting conditions or are fully vested at year end.
2 - these options were subject to certain vesting conditions but were
cancelled in the prior year.
3 - The first 6,500,000 options vest on the first anniversary after
the date of grant and the second 6,500,000 vests on the second anniversary of
the date of grant.
The weighted average contractual life of share options outstanding at the end
of the period was 3.75 years (2016: 3.9 years).
The highest and lowest market price of the Company's shares during the year was
0.825p and 0.325p respectively (2016: 0.275p and 1.3p). The share price at year
end was 0.425p (2016: 0.75p).
1. COMMITMENTS AND CONTINGENT LIABILITIES
As at 30 June 2017, the Group had the following material exploration
commitments:
The Group has three exploration tenements in South Australia. The exploration
commitments relating to EL 5677 Wintinna, to EL 5676 Westfield and to EL 5677
Murloocoppie. These exploration commitments are held by the joint venture
company. These licenses expired in June 2017 and are in the process of being
renewed. Under its joint venture agreement the Group expects that the
exploration commitments of the licences will continue to be met by the joint
venture company in the coming financial year. The total commitment under the
new licenses is not yet determined. Under the previous licenses it was
AUD2,760,000.
The Company has filed a defence to a claim brought by a former director, who
claims GBP225,000 plus interest and costs. The claim concerns a settlement
agreement entered into in 2014. The Company maintains that the claimant
breached the agreement, and is not entitled to the sum claimed. The Company has
issued a counterclaim for approximately GBP30,000 regarding costs incurred in
mitigating the effects of the claimant's actions whilst a director, and also
seeks a costs indemnity. No trial date has yet been fixed by the court.
1. RELATED PARTY TRANSACTIONS
The key management personnel are considered to be the Directors. Details of
their remuneration are included in Note 6 to the financial statements.
1. CONTROLLING PARTY
The directors consider that there is no controlling party.
1. POST REPORTING DATE EVENTS
On 7 July 2017 the Company issued 100,000,000 new ordinary shares of 0.01p per
share by way of a placing, at a price of 0.15p per share raising gross proceeds
of GBP150,000.
On 13 October 2017 the Company issued 420,000,000 new ordinary shares of 0.01p
per share by way of a placing, at a price of 0.05p per share raising gross
proceeds of GBP210,000.
On 3 November 2017 the Company appointed Mr Henry Kloepper as a Non-Executive
Director.
On 22 November 2017 the Company issued 147,000,000 new ordinary shares of 0.01p
per share by way of a placing, at a price of 0.5p per share raising gross
proceeds of GBP735,000.
On the same day the Company appointed previously Non-Executive Directors, Nick
Lyth and Phil Sutherland to the Executive Board as CEO and COO respectively.
In addition the Company granted options over a total of 270,000,000 ordinary
shares to Qingfu Zhang (Chairman), Nick Lyth (CEO), Phil Sutherland (COO), and
Ma Chi (Non-Executive Director). The options have a variety of stipulations
attached but focus predominantly on share price performance and operational
performance.
-ends-
(END) Dow Jones Newswires
December 19, 2017 02:00 ET (07:00 GMT)
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