The Group undertakes transactions principally in US Dollars,
Sterling, Papua New Guinea Kina, Malagasy Ariary and Australian
Dollars. While the Group continually monitors its exposure to
movements in currency rates, it does not utilise hedging
instruments to protect against currency risks. The main currency
exposure risk to the Group in relation to its financial assets is
to its Sterling bank account balance.
Sensitivity analysis for foreign exchange risk to Group.
The following analysis illustrates the effect that specific
changes could have had on the Group's income and equity for
Sterling to US Dollar exchange movements. This analysis is for
illustrative purposes only, as in practice market rates rarely
change in isolation. Actual results in the future may differ
materially from these results due to developments in the global
financial markets which may cause fluctuations in interest and
exchange rates to vary from the hypothetical amounts disclosed in
the following table, which therefore should not be considered a
projection of likely future events and losses.
10% weakening of US dollar 10% strengthening of US
dollar
Impact on Impact on Impact on Impact on
Equity Income /Reserves Equity Income /Reserves
$ $ $ $
At 31.12.2013
Sterling 21,183 21,183 (21,183) (21,183)
Interest rate risk - The Group utilises cash deposits at
variable rates of interest for a variety of short term periods,
depending on cash requirements. The rates are reviewed regularly
and the best rate obtained in the context of the Group's needs.
Extent and nature of financial instruments
The financial assets and liabilities held by the Group at the
year end are shown below. The directors consider that the carrying
amounts approximates to their fair value.
31 December 31 December 31 December 31 December
2013 2013 2012 2012
Restated Restated
$ $ $ $
Assets Carrying Net fair Carrying Net fair
amount value amount value
Taxation receivable - - 3,884 3,884
Trade and other
receivables - - 493,060 493,060
Cash at bank and
in hand 211,683 211,683 124,215 124,215
Total 211,683 211,683 621,159 621,159
31 December 31 December 31 December 31 December
2013 2013 2012 2012
Restated Restated
$ $ $ $
Liabilities Carrying Net fair Carrying Net fair
amount value amount Value
Trade and other payables 21,215 21,215 14,769 14,769
Loans payable 12,001,620 12,001,620 9,865,769 9,865,769
12,022,835 12,022,835 9,880,538 9,880,538
Collateral
The loans payable of $12,001,620 are secured by a charge over
the shares held by the Company in its subsidiaries and are
repayable within 60 days following a demand by Natasa Mining Ltd
("Natasa") provided that such notice cannot be given prior to 31
January 2015 or earlier on the occurrence of an event of default
(which would include Natasa not having two representatives on the
Board of the Company) (see note 17).
Capital Management
The Company's capital consists wholly of ordinary shares. There
are no other categories of shares in issue and the Company does not
use any other financial instruments as capital substitutes or quasi
capital. The Company manages its issued capital by considering
future capital requirements of the Group which are largely dictated
by the exploration programme of its subsidiary, Uramad SA,
operating in Madagascar and of Gini Energy Ltd's possible future
development programme in Papua New Guinea, as well as the head
office overhead costs of the Company in Monaco. The Company's board
of directors as a whole manages the capital by considering the need
to raise further capital to meet the above costs on a rolling 12
month basis so as to enable the accounts to be prepared on a going
concern basis but without unnecessary dilution of existing
shareholder interests. The Board always places a priority on
maximising the return to existing shareholders before raising
further capital.
There are no externally imposed capital requirements on the
Company.
Details of the ordinary share capital are set out in note
19.
28. Corporate Restructure
UMC Energy Corporation (the "Company") was incorporated and
registered under the laws of the Cayman Islands on 10 October 2012
as an exempted company with limited liability and limited by shares
under the Cayman Islands Companies Law with Cayman Islands company
registered number MC-272327 with the name UMC Cayman Corporation.
On 21 February 2013, the name of the company was changed to UMC
Energy Corporation. The Company acquired all the assets and
liabilities of UMC Energy PLC (incorporated in the United Kingdom
("PLC")). The acquisition of the assets and liabilities was met by
the issue of 484,444,763 ordinary shares in the Company, which
shares were distributed to the shareholders of PLC on a 1:1 basis
such that the shareholders of PLC became the shareholders of the
Company with each shareholder holding the same number of shares in
the Company, in both absolute and percentage terms, as they did in
PLC, following which all the shares in PLC were cancelled.
The following agreements were entered into between the Company
and PLC to give effect to the redomiciliation.
Agreements for Asset Sale and Assignment
In accordance with the terms of the Deed of Accession and
Indemnity Agreement dated 4 December 2012, PLC sold to UMC Energy
Ltd, 1,000,000 ordinary shares of no par value in PNG Energy Ltd.
PLC also assigned and transferred to UMC Energy Ltd all
intellectual property owned by PLC pertaining to the assets of PNG
Energy Ltd and its wholly owned subsidiary Gini Energy Ltd. The
consideration for the sale of these securities and the assignment
of the intellectual property was in aggregate GBP16,351,282. In
satisfaction of the consideration, UMC Energy Ltd issued 99
ordinary shares with a par value of US$1 each together with an
aggregate share premium thereon so the aggregate of the nominal
value and the share premium equalled $26,252,100 (being the US$
equivalent of GBP16,351,282 as of 4 December 2012). PLC directed
UMC Energy Ltd to issue the 99 ordinary shares directly to China
Pacific Petroleum Corporation
in consideration of China Pacific Petroleum Corporation issuing
and allotting to the Company 99,999 ordinary shares of no par value
with an aggregate capital amount of US$26,252,100 in consideration
of the Company issuing and allotting to PLC 434,145,000 ordinary
shares of no par value with an aggregate capital amount of
US$26,252,100.
In accordance with the terms of the Deed of Accession and
Indemnity Agreement dated 18 December 2012 PLC sold to Uramad Ltd
398 ordinary shares with a par value of MGA 20,000.00 each in
Uramad S.A. for a consideration of GBP1,890,898 ($3,057,908). PLC
assigned to Uramad Ltd the entire balance of monies owed by Uramad
S.A. to PLC, being a capital amount of $5,846,160, for a
consideration of GBP1. In satisfaction of the consideration for the
sale of the securities and the assignment of the debt, Uramad Ltd
issued 99 ordinary shares with a par value of US$1 each together
with an aggregate share premium thereon so the aggregate of the
nominal value and the share premium equalled $3,057,910 (being the
US$ equivalent of GBP1,890,899 as of 18 December 2012). PLC
directed Uramad Ltd to issue the 99 ordinary shares directly to the
Company in consideration of the Company issuing to PLC 50,204,999
ordinary shares of no par value with an aggregate capital amount of
$3,057,910.
Transfer Agreement
On 2 August 2013, PLC and the Company entered into an asset sale
and purchase agreement pursuant to which the Company acquired all
of the remaining assets and assumed all of the liabilities of PLC.
The acquisition was funded by the Company issuing 94,763 ordinary
shares of no par value to PLC.
Subscription Agreement for One Share in UMC Energy PLC
On 2 August 2013, PLC and the Company entered into a
subscription agreement whereby the Company subscribed for and PLC
agreed to allot and issue one ordinary share of GBP0.005 in the
capital of PLC for a subscription price of GBP1. As a result of
this subscription PLC became a wholly-owned subsidiary of the
Company, at which time PLC's name was changed to UMC Energy Ltd.
This company was subsequently deregistered.
The Directors considered that the fair value of the net assets
of PLC equalled that of their net book value of $17,242,517 and
this value was attached to the 484,444,763 ordinary shares issued
by the Company to acquire the assets and liabilities of PLC.
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