TIDMSOLO
RNS Number : 9571P
Solo Oil Plc
11 June 2015
For Immediate Release
11 June 2015
Solo Oil plc
('Solo' or 'the Company')
Audited Accounts for the 12 months to 31 December 2014
Solo Oil plc announces that the Company's audited Report and
Accounts for the 12 months to 31 December 2014 are being posted to
Shareholders and will shortly be available from the Company's
website, www.solooil.co.uk
Chairman's Statement
I am pleased to present the report of the Company's activities
during the year ended 31 December 2014. In my first year as
Chairman I am pleased to report continued progress in creating
value within the portfolio and towards the Company being cash
generative following the acquisition of a material stake in the
Kiliwani North development on Songo Songo Island, Tanzania where
first gas sales are expected in 2015.
Solo continues to grow and diversify with the addition of a new
area of investment in the United Kingdom and with significant
advances in our existing investments in both the onshore Ruvuma
Basin in Tanzania and in West Africa. Further opportunities to
increase our exposure to the petroleum sector are under active
review and we look forward to making further investments in the
years ahead.
Investment Strategy
The Company has continued to pursue its original investing
policy, as approved by the shareholders in 2009, which is to
develop a diverse worldwide portfolio of exploration, development
and production interests, with the primary focus being in Africa.
At the time of writing Solo holds material assets in Tanzania,
Nigeria, the United Kingdom and Canada.
Highlights for the period include:
Tanzania
-- The exploration drilling commitment in the Ruvuma PSA were
extended into the 2(nd) Extension Period to allow additional
seismic to be acquired prior to further drilling
-- A total of 180.6 kilometres of infill 2D seismic data were
acquired and processed over the Ntorya-1 and Likonde-1 discoveries
in Tanzania
-- New seismic resource estimates in the Ruvuma PSA led to a
substantial upgrade to over 4 trillion cubic feet gross un-risked
prospective gas in place
-- Ntorya-1 has been attributed independent discovered gross gas
in place of 153 bcf, with mean contingent resources of 70 bcf
-- An un-appraised Ntorya-Likonde gross mean gas in place of 2.6
tcf remains to be proven by further drilling
-- Solo acquired a 6.5% interest in the Kiliwani North
Development Licence in Tanzania from Aminex in early 2015
-- Solo also agreed an option to acquire a further 6.5% on the same terms at a later date
-- Kiliwani North-1 has discovered gross gas in place of 44 bcf,
with mean contingent resources of 28 bcf.
United Kingdom
-- Solo acquired a 6.5% interest in the Horse Hill prospect and
associated licences, PEDL137 and 246, in the Weald Basin
-- The Horse Hill-1 well was successfully drilled to a depth of
8,870 feet MD and resulted in the discovery of oil in the
Portlandian Sandstone and in older Kimmeridgian, Oxfordian and
Liassic rocks
-- The Portlandian Sandstone discovery is estimated to contain
21 million barrels of oil ("mmbbls") initially in place (gross) and
a flow test is planned in 2015 to increase the understanding of the
commerciality of this discovery
-- The discovery in the Jurassic Kimmeridgian, Oxfordian and
Liassic limestones and mudstones has been credited with very
significant gross oil in place between 158 and 255 mmbbls
-- Work is still ongoing to establish the possibility of
contingent resources at the Jurassic level in the licence area and
in the wider Weald Basin
-- In conjunction with UK Oil and Gas Investments plc and Angus
Energy Limited the Company lodged an application for onshore
acreage in the Isle of Wight as part the UK 14(th) Onshore Licence
Round
West Africa
-- Ongoing discussions with Pan Minerals through 2014 resulted
(after the current year-end) in an agreement to acquire a 20%
interest in Burj Petroleum Africa Limited, a company which has made
applications for a number of "marginal field" interests in
Nigeria
Corporate
-- During the year, the Company raised a total of GBP2.76
million before financing costs through the allotment of 416,466,166
shares in private placements and an equity swap agreement with YA
Global Master Fund
-- A US$5 million loan facility was entered into in September
2014 with YA Global Master Fund and a total of US$1 million was
drawn on that facility during 2014
-- Fergus Jenkins and Donald Strang joined the Board as
executive directors in October 2014, whilst company founder David
Lenigas retired having served as Solo's executive chairman since
January 2008. Neil Ritson was appointed as chairman.
Asset Review:
Tanzania, Ruvuma Basin
Solo has a 25% interest in the Ruvuma Petroleum Sharing
Agreement ("Ruvuma PSA") in the south-east of Tanzania that covers
approximately 3,447 square kilometres of which approximately 10%
lies offshore and the balance onshore. The Ruvuma PSA is in a
region of southern Tanzania where very substantial gas discoveries
have been made offshore in recent years.
The Ntorya-1 discovery well reached a final total depth of 3,150
metres and a gas zone between 2,663 and 2,688 metres was tested in
June 2012. Flow testing on a 3.5 metres zone at the top of the
gross 25 metre gas bearing interval produced a maximum flow rate of
20.1 million cubic feet per day ("mmscfd") and 139 barrels per day
("bpd") of 53 degree API condensate through a 1-inch choke.
Following the completion of the test sequence the well was
suspended as a discovery for subsequent additional testing or
production.
An infill 2D seismic programme totalling 180.6 kilometres was
acquired in April and May 2014 and was processed and interpreted by
the PSA operator, Aminex plc. The new seismic data quality was
markedly improved on earlier efforts due in part to close detail to
the static corrections to the near surface portion of the data. On
the basis of the improved quality some of the earlier legacy data
was also reprocessed with the improved statics model and that data
was subsequently integrated with the new interpretations.
The operator's interpretation of the new 2D seismic lead to a
re-estimation the discovered and prospective resources in the
Likonde-Ntorya area leading to increased resources estimates in
September and December. The operators work was subsequently audited
by LR Senergy who issued a Competent Person's Report ("CPR") in May
2015. LR Senergy estimated that Ntorya contains gross 158 billion
cubic feet ("bcf") of proven gas in place, of which they attribute
a gross 70 bcf as best estimate contingent resources. Overall in
the Ruvuma PSA LR Senergy estimate gross 4.17 trillion cubic feet
("tcf") of discovered and undiscovered gas in place. These
estimates are tabulated in Table 1 below.
Table 1: Gross mean estimated discovered and undiscovered gas
potential in Ruvuma PSC
Source Date Ntorya Ntorya Ntorya Ruvuma
Contingent Discovered area Undiscovered PSC Discovered
Resources GIIP Prospective and Undiscovered
bcf bcf Resources unrisked
GIIP GIIP
tcf tcf
------------ -------------- ------------ ------------ ------------------- ------------------
ISIS 2 July 2012 - 178 1.5 5.75
------------ -------------- ------------ ------------ ------------------- ------------------
Aminex 11 September - - 2.3 -
2014
------------ -------------- ------------ ------------ ------------------- ------------------
Aminex 18 December - - 3.2 -
2014
------------ -------------- ------------ ------------ ------------------- ------------------
LR Senergy 14 May 2015 70 153 2.6 4.17
------------ -------------- ------------ ------------ ------------------- ------------------
Note: ISIS report pre-dates the most recent acreage
relinquishment and covers a larger pre-relinquishment area of the
as compared to the Ruvuma Basin as compared to later estimates.
The partners in the Ruvuma PSA are planning the drilling an
appraisal wells in 2015 in order to firm up these resource volumes
and to commence gas sales negotiations. An appraisal well location
has been selected and rig selection and associated contract
discussions have commenced in 2015 with the objective of spudding
an appraisal well before year end. The significant softening of the
global rig market in the face of falling oil prices has reduced the
expected cost of drilling and increased the number of options
available.
The recently constructed, Chinese financed, 36-inch gas pipeline
that runs through the Ruvuma PSA area from Mtwara to the Tanzanian
capital, Dar es Salaam, was completed in early 2015 and is
anticipated to be fully commissioned and handed over to the
Tanzanian owners during 2015. Gas is already being produced into
the pipeline and as commissioning of the associated gas handling
plants is completed the pipeline will gradually increase
throughput. Solo estimated that there is at least 500 million cubic
feet per day of demand in the Dar es Salaam area and significant
uncontracted ullage is available in the pipeline to receive likely
gas production from the Ntorya discovery.
Tanzania, Kiliwani North
In October 2014 Solo announced that it had agreed with Aminex to
acquire up to a 13% working interest in the Kiliwani North
development on Songo Songo Island. Kiliwani North-1 well was
drilled by Aminex and its partners in 2008 and discovered gas in a
60 metre column in the Lower Cretaceous. Based on well test results
Kiliwani North-1 is expected to be flowed at a rate of at least 20
mmscfd once on stream through a 2 kilometre tie-in pipeline to the
Songo Songo Island gas processing facility, and from there to the
newly constructed 36-inch pipeline to Dar es Salaam.
Solo agreed in October 2014 to acquire a 6.5% interest in the
project immediately and obtained an option to acquire a further
6.5% interest at a later date. By year end most conditions
precedent for the acquisition had been met and the formal approval
by the Tanzanian authorities of the assignment was expected in
early 2015. That approval was granted in late February 2015 and
Solo completed its acquisition of the initial 6.5% interest through
the payment of US$3.5 million. Solo and Aminex also agreed to
extend the option for Solo to acquire its second 6.5% interest to a
date 30 days after the signing of a gas sales ("GSA") agreement for
the Kiliwani North gas. At the time of writing the GSA remains
unsigned pending resolution of various payment guarantee terms, but
is expected to be signed shortly.
Independently verified gross gas in place of 45 bcf were
computed by Isis Petroleum Consultants Pty Ltd in 2013 and
confirmed by LR Senergy in a Competent Persons Report in May 2015.
LR Senergy computed gross mean gas in place of 44 bcf of which 28
bcf have been attributed as best estimate contingent resources.
UK, Weald Basin
In February 2014 the Company announced that it had signed a
binding agreement (which was later converted into a definitive
agreement and completed) to acquire a 10% interest in a special
purpose company, Horse Hill Developments Limited ("HHDL"), which
held the option to become operator and 65% interest holder in two
Petroleum Exploration and Development Licences ("PEDL") PEDL 137
and 246 in the northern Weald Basin between Gatwick Airport and
London.
The PEDL 137 licence covers 99.29 square kilometres (24,525
acres) to the north of Gatwick Airport in Surrey and contains the
Horse Hill prospect and several other exploration leads. PEDL 246
covers an area of 43.58 square kilometres (10,769 acres) and lies
immediately adjacent and to the east of PEDL137. HHDL subsequently
completed the farm-in to the two PEDLs to obtain the planned 65%
working interest in September 2014.
The Horse Hill-1 well is located approximately 7.5 kilometres
southeast of the producing Brockham Oilfield and approximately 15
kilometres southwest of the Palmers Wood Oilfield. The pre-drill
primary target reservoir horizons were the Portland Sandstone,
which is productive in the Brockham Oilfield, and the Corallian
Formation, which is the producing horizon in the Palmers Wood
Oilfield. The Triassic, which is productive in the nearby Wessex
Basin and has previously tested gas in the Weald Basin, and the
Greater Oolite Formation, were seen as secondary targets for the
well.
The Horse Hill-1 ("HH-1") well commenced drilling operations on
2 September 2014 with 20-inch surface casing being set at 84 feet
below ground level. The Marriott-50 rig was installed on the well
by 22 September 2014 and the drilling of 17 1/2-inch hole to
intermediate 13 3/8-inch casing depth at 1,795 feet measured depth
("MD") completed on 28 September 2014. Drilling continued in 12 1/2
-inch hole and after a further intermediate casing was set at 6,612
feet MD the well reached total depth at 8,870 feet MD on the 4
November 2014.
Evaluation of electric logs and other data collected from the
well resulted in the announcement on 24 October 2014 of a
conventional Upper Portlandian Sandstone discovery with a
preliminary most likely estimate of 3.1 million barrels ("mmbbls")
of gross oil in place in a 102-foot zone. A further 16.8 mmbbls of
possible gross un-risked prospective oil in place were estimated in
the Lower Portlandian Sandstone, in what was believed at the time,
to be an untested fault block to the south of the well. Further
hydrocarbon indications in the Kimmeridgian Formation were observed
and were subject to additional analysis. The anticipated Triassic
reservoir was not found to be present and the well was terminated
in older Palaeozoic formations.
In December 2014, after the initial announcement of a
Portlandian discovery further work, integrating the well results
with a vertical seismic profile ("VSP") and electric logs,
demonstrated that the Collendean Farm-1 and Horse Hill-1 wells were
in communication at Portland reservoir level and the fault
previously interpreted to lie adjacent to HH-1 was a seismic
artefact. The best estimated gross oil in place at the combined
Portlandian Sandstone level was upgraded to 8.2 mmbbls. An
independent reserves review by the Xodus Group released in May
2015, saw this estimate substantially increased again to 21.0
mmbbls. The estimated gross oil in place in the Portland Sandstone
at the various stages of evaluation are tabulated in Table 2
below.
Table 2: Gross estimated discovered oil initially in place
("STOIIP") in Portlandian Sandstone at Horse Hill (mmbbls)
Source Date Low (P90) Best High Mean
(P50) (P10)
------------------ ------------- ---------- ------- ------- -----
Company Internal 24 October
estimate 2014 1.5 3.1 4.8 na
------------------ ------------- ---------- ------- ------- -----
Company Internal 17 December
estimate 2014 5.7 8.2 12.1 na
------------------ ------------- ---------- ------- ------- -----
Xodus Group 11 May 2015 14.3 21.0 30.4 21.8
------------------ ------------- ---------- ------- ------- -----
na = not available
A flow test is planned to test the Portlandian Sandstones in
order to establish the feasibility of a commercial development of
the oil estimated to be in place in the reservoir. That test is
expected to be performed in 2015.
During drilling it was also noted that the Kimmeridge limestones
and surrounding shale contained oil and following the completion of
the drilling of the well extensive geochemical analysis was
conducted which showed the Kimmeridge formation was mature for oil
generation. Armed with this knowledge Solo and its partner in the
license, UK Oil and Gas Investments plc ("UKOG"), contracted NUTECH
Inc. ("Nutech"), an industry specialist in tight reservoir
analysis, to conduct further detailed petrophysical evaluation of
the electric logs. This work resulted in the announcement in April
2015 of a potentially significant play with estimated gross oil in
place of over 150 million barrels per square mile.
The results of the work by Nutech have subsequently been
independently verified in May 2015 by Schlumberger, one of the
world's leading oil and gas service companies, using their
proprietary modelling developed in tight reservoirs in the USA and
applied extensively in the USA and elsewhere. Schlumberger's
estimate of oil in place in the Kimmeridge, Oxford and Lias
mudstones and limestones is approximately 255 million barrels per
square mile (gross). If confirmed, this largely unconventional play
in the Kimmeridge opens up large areas of the Weald Basin that may
have potential for oil production, not limited to the PEDL137
licence area where Horse Hill is located.
UK, Isle of Wight
In October 2014 Solo teamed up with two of its Horse Hill
partners, UK Oil and Gas Investments plc ("UKOG") and Angus Energy
Limited to make an application in the UK 14(th) Landward Licensing
Round. The application was made for a 200 square kilometre onshore
block in the south of the Isle of Wight, adjacent to UKOG's
existing offshore licence which contains an undrilled prospect that
is considered to lie both on and offshore the south coast of the
island. At year end the application was still under consideration
by the Department of Environment and Climate Change (subsequently
the Oil and Gas Authority, ("OGA")) and awards in the 14(th) Round
are now expected in the second half of 2015. Solo holds a
non-operated 30% interest in the application.
West Africa, Nigeria
In 2013 Solo made an investment into Swiss private company Pan
Minerals Oil and Gas AG ("Pan Minerals") in order to assist Pan
Minerals in progressing various opportunities in West Africa where
Solo hoped eventually to take an equity stake in onshore oil
assets. At the beginning of 2014 Solo held a 19.9% interest in Pan
Minerals. During 2014 Solo and Pan Minerals worked together to
assess various options and Pan Minerals independently sought other
investors.
In early 2015 Pan Minerals approached Solo with an opportunity
to invest in Burj Petroleum Africa Limited ("Burj Africa") that had
applied for various undeveloped fields in the 2014 Nigerian
Marginal Fields Bid Round along with joint venture partners Global
Oil and Gas ("Global") and Truvent Consulting. Solo subsequently
exchanged its 19.9% shareholding in Pan Minerals for a 15.9% in
Burj Africa and made a further investment of US$500,000 in cash and
shares to increase that shareholding to 20%. Solo also gained the
right, at its sole election, to convert the equity position in Burj
Africa to a direct participation in the joint venture with Global
in Nigeria.
Global was founded and is controlled by Mr Phil Mulacek, an
internationally known resource entrepreneur, and Global is the
designated operator of the Burj Africa joint venture in Nigeria.
Truvent Consulting is an indigenous Nigerian oil and gas
development company.
Two adjacent marginal fields have been applied for containing 10
wells previously drilled by an international major oil and gas
company. These fields are believed by Burj Africa and its partners
to contain gross proven, probable and possible recoverable oil
reserves of 59.3 million barrels ("mmbbls"), approximately 13.5
mmbbls net to Burj after payment of royalties.
Canada, Ontario
No substantive progress has been made on the Company's assets in
Ontario. Solo owns a 28.56% interest in 23,500 acres of petroleum
leases in southern Ontario which contain a number of Ordovician
reefal structures which contain variously oil, gas and condensate.
The operator, Reef Resources Inc., has been unable to raise the
necessary funds to continue the development of the Ausable gas
condensate field and no alternative has so far been found to unlock
the potential. Solo's management continues to seek ways to advance
or monetise the investment made in the Ausable and adjacent Airport
fields, and hopes to report progress in due course.
Corporate
In October 2014 a number of Board changes were announced. David
Lenigas the Company's founder and executive chairman since 2008
retired from the Board and was replaced by Neil Ritson as chairman.
Mr Ritson was replaced as executive director by the appointment of
Fergus Jenkins. Donald Strang was also appointed as executive
director responsible for finance.
During the year Solo invested in its operations in Tanzania, the
UK and West Africa through new shareholder equity and an equity
swap arrangement.
Financial Results
The Company's loss for the year is GBP1.85 million (2013:
GBP3.12 million).
During the year the Company spent GBP1 million on acquisition
and enhancement of intangible assets (2013: GBP1.4 million). An
impairment charge of GBP0.4 million has been provided against the
value of intangible assets (2013: GBP1.7 million).
Immediate Outlook
The Company's 25% stake in the Ruvuma PSA continues to represent
the most significant asset in the Company and its further
development is being vigorously pursued. We look to realise the
full potential of our investment in Ruvuma over the next few years
as the discoveries made are commercialised and new exploration is
conducted. The acquisition of a stake in the Kiliwani North
Development is expected to provide ongoing revenue once gas sales
commence in 2015.
The Horse Hill-1 well has had a significant impact on the
portfolio, containing both a potentially commercial conventional
Portland Sandstone discovery and a major entry into a new
unconventional play in the Jurassic. The ongoing UK 14(th) Landward
Licensing Round may also lead to additional opportunities in the
UK.
The possible award of field development assets in Nigeria also
marks a further significant milestone in the planned development of
the Solo portfolio in Africa.
The Company is also continuing to seek further investment
opportunities, with several new opportunities currently being
evaluated.
Conclusion
During 2014 the portfolio was significantly enlarged with the
acquisition of additional assets in Tanzania and the UK. The
Company's track record in exploration was maintained through the
drilling of the Horse Hill-1 well and the discovery of oil in the
Portland Sandstone and indications of a major basin-wide Jurassic
unconventional play in the Kimmeridge mudstones and limestones. To
date the Company has been involved with four exploration wells;
Likonde-1, North Airport-1, Ntorya-1 and Horse Hill-1, with all
four wells having hydrocarbon indications, and three being
considered potentially commercial. In addition to exploration, Solo
has now acquired an interest in the Kiliwani North-1 well which is
due to be on stream for gas production in 2015. The Company's
Ausable field wells in Ontario continue to be shut-in but to have
production potential and efforts continue in order to unlock that
potential.
I would like to thank the directors, past and present, and the
shareholders for their continued support as the Company continues
to grow and to seek additional opportunities to deploy capital in
non-operated joint ventures with the potential for significant
value growth.
Neil Ritson
Chairman
11 June 2015
For further information:
Solo Oil plc
Neil Ritson
Fergus Jenkins +44 (0) 20 3794 9230
Beaumont Cornish Limited
Nominated Adviser and
Joint Broker
Roland Cornish +44 (0) 20 7628 3396
Shore Capital
Joint Broker
Pascal Keane +44 (0) 20 7408 4090
Jerry Keen (Corporate
Broker)
Bell Pottinger
Public Relations
Henry Lerwill +44 (0) 20 3772 2500
Cassiopeia Services
Investor Relations
Stefania Barbaglio +44 (0) 79 4969 0338
GLOSSARY & NOTES
2D seismic = seismic data collected using the two-dimensional
common depth point method
API = American Petroleum Institute
bbls = barrels of oil
bcf = billion cubic feet
boe = barrels of oil equivalent calculated on the basis of six
thousand cubic feet of gas equals one barrel of oil
boepd = boe per day
bopd = barrels of oil per day
bpd = barrels per day
contingent resources = those quantities of petroleum estimated,
at a gin date, to be potentially recoverable from known
accumulations, but the associated projects are not yet considered
mature enough for commercial development due to one or more
contingencies
CPR = Competent Persons Report
discovery = a petroleum accumulation for which one or several
exploratory wells have established through testing, sampling and/or
logging the existence of a significant quantity of potentially
moveable hydrocarbons
electric logs = tools used within the wellbore to measure the
rock and fluid properties of the surrounding formations
EOR = enhanced oil recovery
GIIP or GIP = gas initially in place
GSA = gas sales agreement
HH-1 = Horse Hill-1 well
MD = measure depth
mmbbls = million barrels of oil
mmscf = million standard cubic feet of gas
mmscfd = million standard cubic feet of gas per day
OGA = Oil and Gas Authority (formally the Department of Energy
and Climate Change)
OIIP or OIP = oil initially in place
PEDL = Petroleum Exploration and Development Licence
permeability = the capability of a porous rock or sediment to
permit the flow of fluids through the pore space
petrophysics = the study of the physical and chemical properties
of rock formations and their interactions with fluids
play = a set of known or postulated oil or gas accumulations
sharing similar geologic properties
porosity = the percentage of void space in a rock formation
prospective resources = those quantities of petroleum which are
estimated, at a given date, to be potentially recovered from
undiscovered accumulations
PSC or PSA = Production Sharing Contract or Agreement
reserves = those quantities of petroleum anticipated to be
commercially recoverable by application of development projects to
known accumulations from a given date forward under defined
conditions
reservoir = a subsurface rock formation containing an individual
natural accumulation of moveable petroleum
tcf = trillion cubic feet
unconventional reservoir = widely accepted to mean those
hydrocarbon reservoirs that are tight; that is have low
permeability
VSP = vertical seismic profile
Unless otherwise stated all figures are net to Solo
All reserves and resources definitions used are as set out the
Society of Petroleum Engineers' Petroleum Resources Management
System unless otherwise stated.
Competent Person's statement:
The information contained in this document has been reviewed and
approved by Neil Ritson, Chairman for Solo Oil Plc. Mr Ritson is a
member of the Society of Petroleum Engineers, a Fellow of the
Geological Society, an Active Member of the American Association of
Petroleum Geologists and has over 35 years relevant experience in
the oil industry.
Financial Statements
Statement of Comprehensive Income for the year ended 31 December
2014
Year ended 18 months ended
Notes 31 December 2014 31 December 2013
GBP000's GBP000's
Revenue - -
Administrative expenses 3 (1,130) (1,485)
----------------- -----------------
Loss from operations (1,130) (1,485)
Impairment charge 9 (400) (1,658)
Finance costs 6 (84) -
Finance revenue 7 27 26
Provision for losses on financial instrument 13 (261) -
Loss before taxation (1,848) (3,117)
Income tax 5 - -
----------------- -----------------
Loss for the period (1,848) (3,117)
================= =================
Other comprehensive income
Decrease in value of Available for sale assets (4) -
----------------- -----------------
Other comprehensive income for the year net of taxation (4) -
----------------- -----------------
Total comprehensive income for the period attributable to equity
holders of the parent (1,852) (3,117)
----------------- -----------------
Loss per share (pence)
Basic and diluted 8 (0.04) (0.08)
----------------- -----------------
Statement of Financial Position as at 31 December 2014
Notes 31 December 2014 31 December 2013
GBP000's GBP000's
Assets
Non- current assets
Investment in subsidiaries 11 - -
Intangible asset 9 9,043 8,449
Available for sale assets 10 1,522 816
--------------------- ---------------------
Total non-current assets 10,565 9,265
Current assets
Trade and other receivables 12 974 1,291
Derivative financial instrument 13 489 -
Cash and cash equivalents 2,021 1,956
--------------------- ---------------------
Total current assets 3,484 3,247
--------------------- ---------------------
Total assets 14,049 12,512
--------------------- ---------------------
Liabilities
Current liabilities
Trade and other payables 14 (180) (116)
Borrowings 15 (536) -
--------------------- ---------------------
Total liabilities (716) (116)
--------------------- ---------------------
Net assets 13,333 12,396
===================== =====================
Equity
Share capital 16 501 460
Deferred share capital 16 1,831 1,831
Share premium 22,360 19,852
Share-based payment reserve 936 696
AFS reserve (4) -
Retained loss (12,291) (10,443)
13,333 12,396
===================== =====================
The financial statements were approved by the board of directors and authorised for issue
on 11 June 2015.
They were signed on its behalf by ;
Don Strang Neil Ritson
Director Director
Statement of Cash Flows for the year ended 31 December 2014
Year ended 18 Months ended
31 December 2014 31 December 2013
GBP000's GBP000's
Cash outflow from operating activities
Operating loss (1,130) (1,485)
Adjustments for:
Share-based payments 208 240
Decrease/(Increase) in receivables 317 (421)
Increase/(Decrease) in payables 64 (1,054)
Foreign exchange loss 3 -
Net cash outflow from operating activities (538) (2,720)
----------------- -----------------
Cash flows from investing activities
Interest received 27 26
Payments to acquire intangible assets (994) (1,446)
Payment to acquire derivative financial instrument (750) -
Payments to acquire Available for sale investments (713) (516)
Net cash outflow from investing activities (2,430) (1,936)
----------------- -----------------
Cash flows from financing activities
Proceeds from borrowings 536 -
Finance costs (52)
Proceeds on issuing of ordinary shares 2,759 6,878
Cost of issue of ordinary shares (210) (378)
Net cash inflow from financing activities 3,033 6,500
----------------- -----------------
Net increase in cash and cash equivalents 65 1,844
Cash and cash equivalents at beginning of the period 1,956 112
Cash and cash equivalents at end of the period 2,021 1,956
================= =================
The above Cash Flow should be read in conjunction with the
accompanying notes.
Statement of Changes in Equity for the year ended 31 December
2014
Deferred Share AFS
Share share Share based reserve Accumulated Total
capital capital premium payments losses equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 30 June 2012 269 1,831 13,243 540 - (7,410) 8,473
--------- --------- --------- --------- --------- ------------ ---------
Loss for the period - - - - - (3,117) (3,117)
--------- --------- --------- --------- --------- ------------ ---------
Total comprehensive income - - - - - (3,117) (3,117)
Share issue 191 - 6,987 - - - 7,178
Cost of share issue - - (378) - - - (378)
Share options and warrants lapsed - - - (84) - 84 -
Share-based payment charge - - - 240 - - 240
--------- --------- --------- --------- --------- ------------ ---------
Total contributions by and
distributions to owners of the
Company 191 - 6,609 156 - 84 7,040
Balance at 31 December 2013 460 1,831 19,852 696 - (10,443) 12,396
--------- --------- --------- --------- --------- ------------ ---------
Loss for the period - - - - - (1,848) (1,848)
Decrease in value of Available for
sale assets - - - - (4) - (4)
--------- --------- --------- --------- --------- ------------ ---------
Total comprehensive income - - - - (4) (1.848) (1,852)
Share issue 41 - 2,718 - - - 2,759
Cost of share issue - - (210) - - - (210)
Share-based payment charge - - - 240 - - 240
--------- --------- --------- --------- --------- ------------ ---------
Total contributions by and
distributions to owners of the
Company 41 - 2,508 240 - - 2,789
Balance at 31 December 2014 501 1,831 22,360 936 (4) (12,291) 13,333
--------- --------- --------- --------- --------- ------------ ---------
Notes to the financial statements for the period ended 31
December 2014
1 Summary of significant accounting policies
General information and authorisation of financial
statements
Solo Oil Plc is a public limited Company incorporated
in England & Wales. The address of its registered
office is Suite 3B, Princes House,
38 Jermyn Street, London SW1Y 6DN. The Company's
ordinary shares are traded on the AIM Market operated
by the London Stock Exchange. The financial statements
of Solo Oil plc for the year ended 31 December
2014 were authorised for issue by the Board on
11 June 2015 and the balance sheets signed on
the Board's behalf by Mr. Neil Ritson and Mr Don
Strang.
Statement of compliance with IFRS
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union
and as applied in accordance with the provisions
of the Companies Act 2006. The principal accounting
policies adopted by the Company are set out below.
New standards and interpretations not applied
IASB (International Accounting Standards Board)
and IFRIC (International Financial Reporting Interpretations
Committee) have issued the following standards
and interpretations with an effective date after
the date of these financial statements:
The following standards have been adopted by the
group for the first time for the financial year
beginning on or after 1 January 2014 and have
a material impact on the Company:
Amendment to IAS 32, 'Financial instruments: Presentation'
on offsetting financial assets and financial liabilities.
This amendment clarifies that the right of set-off
must not be contingent on a future event. It must
also be legally enforceable for all counterparties
in the normal course of business, as well as in
the event of default, insolvency or bankruptcy.
The amendment also considers settlement mechanisms.
The amendment did not have a significant effect
on the group financial statements.
Amendments to IAS 36, 'Impairment of assets',
on the recoverable amount disclosures for non-financial
assets. This amendment removed certain disclosures
of the recoverable amount of CGUs which had been
included in IAS 36 by the issue of IFRS 13.
Amendment to IAS 39, 'Financial instruments: Recognition
and measurement' on the novation of derivatives
and the continuation of hedge accounting. This
amendment considers legislative changes to 'over-the-counter'
derivatives and the establishment of central counterparties.
Under IAS 39 novation of derivatives to central
counterparties would result in discontinuance
of hedge accounting. The amendment provides relief
from discontinuing hedge accounting when novation
of a hedging instrument meets specified criteria.
The Company has applied the amendment and there
has been no significant impact on the Company
financial statements as a result.
IFRIC 21, 'Levies', sets out the accounting for
an obligation to pay a levy if that liability
is within the scope of IAS 37 'Provisions'. The
interpretation addresses what the obligating event
is that gives rise to pay a levy and when a liability
should be recognised. The Company is not currently
subjected to significant levies so the impact
on the Company is not material.
Other standards, amendments and interpretations
which are effective for the financial year beginning
on 1 January 2014 are not material to the Company.
New standards, amendments and interpretations
not yet adopted
A number of new standards and amendments to standards
and interpretations are effective for annual periods
beginning after 1 January 2014, and have not been
applied in preparing these consolidated financial
statement. None of these is expected to have a
significant effect on the consolidated financial
statements of the Company, except the following
set out below:
IFRS 9, 'Financial instruments', addresses the
classification, measurement and recognition of
financial assets and financial liabilities. The
complete version of IFRS 9 was issued in July
2014. It replaces the guidance in IAS 39 that
relates to the classification and measurement
of financial instruments. IFRS 9 retains but simplifies
the mixed measurement model and establishes three
primary measurement categories for financial assets:
amortised cost, fair value through OCI and fair
value through P&L. The basis of classification
depends on the entity's business model and the
contractual cash flow characteristics of the financial
asset. Investments in equity instruments are required
to be measured at fair value through profit or
loss with the irrevocable option at inception
to present changes in fair value in OCI not recycling.
There is now a new expected credit losses model
that replaces the incurred loss impairment model
used in IAS 39. For financial liabilities there
were no changes to classification and measurement
except for the recognition of changes in own credit
risk in other comprehensive income, for liabilities
designated at fair value through profit or loss.
IFRS 9 relaxes the requirements for hedge effectiveness
by replacing the bright line hedge effectiveness
tests. It requires an economic relationship between
the hedged item and hedging instrument and for
the 'hedged ratio' to be the same as the one management
actually use for risk management purposes. Contemporaneous
documentation is still required but is different
to that currently prepared under IAS 39. The standard
is effective for accounting periods beginning
on or after 1 January 2018. Early adoption is
permitted. The group is yet to assess IFRS 9's
full impact.
IFRS 15, 'Revenue from contracts with customers'
deals with revenue recognition and establishes
principles for reporting useful information to
users of financial statements about the nature,
amount, timing and uncertainty of revenue and
cash flows arising from an entity's contracts
with customers. Revenue is recognised when a customer
obtains control of a good or service and thus
has the ability to direct the use and obtain the
benefits from the good or service. The standard
replaces IAS 18 'Revenue' and IAS 11 'Construction
contracts' and related interpretations. The standard
is effective for annual periods beginning on or
after 1 January 2017 and earlier application is
permitted. The Company is assessing the impact
of IFRS 15.
There are no other IFRSs or IFRIC interpretations
that are not yet effective that would be expected
to have a material impact on the Company.
Basis of preparation
The consolidated financial statements have been
prepared on the historical cost basis, except for
the measurement to fair value of assets and financial
instruments as described in the accounting policies
below, and on a going concern basis.
The financial report is presented in Pound Sterling
(GBP) and all values are rounded to the nearest
thousand pounds (GBP'000) unless otherwise stated.
Basis of consolidation
Where the Company has the power, either directly
or indirectly, to govern the financial and operating
policies of another entity or business so as to
obtain benefits from its activities, it is classified
as a subsidiary. Consolidated financial statements
would represent the results of the Company and
its subsidiaries ("the Group") as if they formed
a single entity. Intercompany transactions and
balances between Group companies are therefore
eliminated in full. If a subsidiary has remained
dormant throughout its incorporated life, there
is no consolidation of that subsidiary required.
Available for sale financial assets
Available-for-sale financial assets are non-derivative
financial assets that are either designated to
this category or do not qualify for inclusion in
any of the other categories of financial assets.
The Group's available-for-sale financial assets
include unlisted securities. These available-for-sale
financial assets are measured at fair value. Gains
and losses are recognised in other comprehensive
income and reported within the available-for-sale
reserve within equity, except for impairment losses
and foreign exchange differences, which are recognised
in profit or loss. When the asset is disposed of
or is determined to be impaired, the cumulative
gain or loss recognised in other comprehensive
income is reclassified from the equity reserve
to profit or loss and presented as a reclassification
adjustment within other comprehensive income. Interest
calculated using the effective interest method
and dividends are recognised in profit or loss
within finance income
Revenue recognition
Revenue is recognised to the extent that the right
to consideration is obtained in exchange for performance.
Payment received in advance of performance is deferred
on the balance sheet as a liability and released
as services are performed or products are exchanged
as per the agreement with the customer.
Interest income is accrued on a time basis, by
reference to the principal outstanding and at the
effective interest rate applicable, which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to that asset's net carrying amount.
Foreign currencies
Transactions in currencies other than Sterling
are recorded at the rates of exchange prevailing
on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that
are denominated foreign currencies are retranslated
at the rates prevailing on the balance sheet date.
Gains and losses arising on retranslation are included
in the income statement for the period.
On consolidation, the results of overseas operations
are translated into sterling at rates approximating
to those ruling when the transactions took place.
All assets and liabilities of the overseas operations,
including goodwill arising on the acquisition of
those operations, are translated at the rate ruling
at the balance sheet date. Exchange differences
arising on translating the opening net assets at
opening rate and the results of overseas operations
at actual rate are recognised directly in equity
(the "foreign exchange reserve").
Taxation
The tax expense represents the sum of the current
tax and deferred tax.
The current tax is based on taxable profit for
the period. Taxable profit differs from net profit
as reported in the income statement because it
excludes items of income or expense that are taxable
or deductible in other periods and it further excludes
items that are never taxable or deductible. The
liability for current tax is calculated by using
tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable
or recoverable on differences between the carrying
amount of assets and liabilities in the financial
statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are
recognised to the extent that it is probable that
taxable profits will be available against which
deductible temporary differences can be utilised.
Such assets and liabilities are not recognised
if the temporary difference arises from goodwill
or from the initial recognition (other than in
a business combination) of other assets and liabilities
in a transaction which affects neither the tax
profit nor the accounting profit.
Deferred tax is calculated at the tax rates that
are expected to apply to the period when the asset
is realised or the liability is settled. Deferred
tax is charged or credited in the income statement,
except when it relates to items credited or charged
directly to equity, in which case the deferred
tax is also dealt with in equity.
Externally acquired intangible assets
Externally acquired intangible assets are initially
recognised at cost and subsequently amortised on
a straight-line basis over their useful economic
lives. The amortisation expense is included within
the administrative expenses line in the consolidated
income statement.
Intangible assets are recognised on business combinations
if they are separable from the acquired entity
or give rise to other contractual/legal rights.
The amounts ascribed to such intangibles are arrived
at by using appropriate valuation techniques.
Impairment of tangible and intangible assets excluding
goodwill
At each balance sheet date the Group reviews the
carrying amounts of its tangible and intangible
assets to determine whether there is any indication
that those assets have suffered an impairment loss.
If there is such indication then an estimate of
the asset's recoverable amount is performed and
compared to the carrying amount.
Recoverable amount is the higher of fair value
less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are
discounted to their present value. Where the asset
does not generate cash flows that are independent
from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the
asset belongs.
If the recoverable amount of an asset is estimated
to be less that its carrying amount, the carrying
amount of the asset is reduced to its recoverable
amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset
is carried at a re-valued amount, in which case
the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to
the revised estimate of its recoverable amount,
but so that the increased carrying amount does
not exceed the carrying amount that would have
been determined had no impairment loss been recognised
for the asset in prior periods. A reversal of an
impairment loss is recognised as income immediately,
unless the relevant asset is carried at a re-valued
amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
Borrowings
Borrowings are recognised initially at fair value,
net of any applicable transaction costs incurred.
Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net
of transaction costs) and the redemption value
is recognised in the income statement over the
period of the borrowings using the effective interest
method (if applicable).
Interest on borrowings is accrued as applicable
to that class of borrowing.
Provisions
Provisions are recognised for liabilities of uncertain
timing or amount that have arisen as a result of
past transactions and are discounted at a pre-tax
rate reflecting current market assessments of the
time value of money and the risks specific to the
liability.
Financial instruments
Financial assets and financial liabilities are
recognised on the balance sheet when the Group
has become a party to the contractual provisions
of the instrument
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand,
cash at bank and short term deposits with banks
and similar financial institutions.
Trade and other receivables
Trade and other receivables do not carry any interest
and are stated at their nominal value as reduced
by appropriate allowances for estimated irrecoverable
amounts.
Financial liability and equity
Financial liabilities and equity instruments are
classified according to the substance of the contractual
arrangements entered into. An equity instrument
is any contract that evidences a residual interest
in the assets of the Company after deducting all
of its liabilities.
Trade and other payables
Trade and other payables are non interest bearing
and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs.
Share-based payments
Where share options are awarded to employees, the
fair value of the options at the date of grant
is charged to the consolidated income statement
over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number
of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative
amount recognised over the vesting period is based
on the number of options that eventually vest.
Market vesting conditions are factored into the
fair value of the options granted. As long as all
other vesting conditions are satisfied, a charge
is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense
is not adjusted for failure to achieve a market
vesting condition.
Where the terms and conditions of options are modified
before they vest, the increase in the fair value
of the options, measured immediately before and
after the modification, is also charged to the
consolidated income statement over the remaining
vesting period.
Where equity instruments are granted to persons
other than employees, the consolidated income statement
is charged with the fair value of goods and services
received. Equity-settled share-based payments are
measured at fair value at the date of grant except
if the value of the service can be reliably established.
The fair value determined at the grant date of
equity-settled share-based payments is expensed
on a straight-line basis over the vesting period,
based on the Company's estimate of shares that
will eventually vest.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding
the future. Estimates and judgements are continually
evaluated based on historical experience and other
factors, including expectations of future events
that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from
these estimates and assumptions. The estimates
and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial
year are discussed below.
Impairment of goodwill
The Group is required to test, on an annual basis,
whether goodwill has suffered any impairment. The
recoverable amount is determined based on value
in use calculations. The use of this method requires
the estimation of future cash flows and the choice
of a discount rate in order to calculate the present
value of the cash flows - actual outcomes may vary.
If the carrying amount exceeds the recoverable
amount then impairment is made.
Useful lives of intangible assets and property,
plant and equipment
Intangible assets and property, plant and equipment
are amortised or depreciated over their useful
lives. Useful lives are based on the management's
estimates of the period that the assets will generate
revenue, which are based on judgement and experience
and periodically reviewed for continued appropriateness.
Changes to estimates can result in significant
variations in the carrying value and amounts charged
to the consolidated income statement in specific
periods.
Share-based payments
The Group utilised an equity-settled share-based
remuneration scheme for employees. Employee services
received, and the corresponding increase in equity,
are measured by reference to the fair value of
the equity instruments at the date of grant, excluding
the impact of any non-market vesting conditions.
The fair value of share options are estimated by
using Black-Scholes valuation method as at the
date of grant. The assumptions used in the valuation
are described in note 12 and include, among others,
the expected volatility, expected life of the options
and number of options expected to vest.
Determination of fair values of intangible assets
acquired in business combinations
The fair value of patents and trademarks acquired
in a business combination is based on the discounted
estimated royalty payments that would have been
avoided as a result of the trademark or a patent
being owned. The fair value of other intangible
assets is based on the discounted cash flows expected
to be derived from the use and eventual sale of
the asset.
Income taxes
The Group is subject to income tax in several jurisdictions
and significant judgement is required in determining
the provision for income taxes. During the ordinary
course of business, there are transactions and
calculations for which the ultimate tax determination
is uncertain. As a result, the Group recognises
tax liabilities based on estimates of whether additional
taxes and interest will be due. The Group believes
that its accruals for tax liabilities are adequate
for all open audit years based on its assessment
of many factors including past experience and interpretations
of tax law. This assessment relies on estimates
and assumptions and may involve a series of complex
judgments about future events. To the extent that
the final tax outcome of such matters is different
than the amounts recorded, the differences will
impact income tax expense in the period in which
such determination is made.
Deferred taxation
Deferred tax assets are recognised when it is judged
more likely than not that they will be recovered.
Equity reserves
Share capital is determined using the nominal value
of shares that have been issued.
The share premium account represents premiums received
on the initial issuing of the share capital. Any
transaction costs associated with the issuing of
shares are deducted from share premium, net of
any related income tax benefits.
The share based payment reserve represents the
cumulative amount which has been expensed in the
income statement in connection with share based
payments, less any amounts transferred to retained
earnings on the exercise of share options.
Available Sale Financial Asset & Hedging reserve
represents the market value movement of AFS investments,
and the market value movement of the Company's
share price in accordance with the Derivative Assets
the Company holds, including the Equity Swap Asset.
Retained earnings include all current and prior
period results as disclosed in the income statement
Going Concern
The financial report for the period ended 31 December
2014 has been prepared on a going concern basis.
Turnover and
2 segmental analysis
The Company has not generated any revenues from
external customers during the year.
An operating segment is a distinguishable component
of the Company that engages in business activities
from which it may earn revenues and incur expenses,
whose operating results are regularly reviewed
by the Company's chief operating decision maker
to make decisions about the allocation of resources
and assessment of performance and about which discrete
financial information is available. The chief operating
decision maker has defined that the Company's only
reportable operating segment during the period
is mining.
Subject to further acquisitions the Company expects
to further review its segmental information during
the forthcoming financial year.
In respect of the total assets, GBP4,084,000 (2013:
GBP3,247,000) arise in the UK, and GBP706,000 (2013:
GBP1,000,000) arise in Canada, GBP8,443,000 arise
in Tanzania (2013: GBP7,449,000), and GBP816,000
arise in Switzerland (2013: GBP816,000).
Year ended 18 Months ended
31 December 2014 31 December 2013
3 Operating loss GBP000's GBP000's
Loss from operations has been arrived at after charging:
Directors fees 279 324
Salaries and wages 78 87
Audit fees 15 16
Share-based payments 208 240
Amounts payable to auditors and their associates in respect of both
audit and non-audit services:
Audit services - statutory audit - Chapman Davis LLP 15 16
------------------ ------------------
15 16
================== ==================
4 Employee information and directors emoluments
Year ended 18 Months ended
31 December 2014 31 December 2013
GBP000's GBP000's
------------------ ------------------
Staff information
The average number of employees (excluding executive directors) was : 2 1
------------------ ------------------
Their aggregate remuneration comprised : GBP000's GBP000's
Wages and salaries 78 87
------------------ ------------------
Total 78 87
------------------ ------------------
Directors' remuneration
Total 279 422
------------------ ------------------
Salary and fees Share-based payments Total
Year ended 31 December 2014 GBP000's GBP000's GBP000's
Neil Ritson 125 - 125
David Lenigas (*1) 95 - 95
Don Strang (*2) 25 - 25
Fergus Jenkins (*2) 10 - 10
Sandy Barblett 24 - 24
279 - 279
================ ===================== ==========
Salary and fees Share-based payments Total
18 Months ended 31 December 2013 GBP000's GBP000's GBP000's
Neil Ritson 138 49 187
David Lenigas 150 49 199
Sandy Barblett 36 - 36
324 98 422
================ ===================== ==========
(*1) Resigned as a director on 17 October 2014.
(*2) Appointed as a director on 17 October 2014.
Year ended 18 Months ended
31 December 2014 31 December 2013
5 Taxation GBP000's GBP000's
Current tax expense
UK corporation tax and income tax of overseas operations on profits for
the period - -
Total income tax expense - -
================== ==================
The reasons for the difference between the actual tax charge for the
period and the standard
rate of corporation tax in the UK applied to profits for the year are as
follows:
Loss for the period (1,848) (3,117)
Standard rate of corporation tax in the UK 21/23% 23/24%
Loss on ordinary activities multiplied by the standard rate of corporation
tax (397) (732)
------------------ ------------------
Expenses not deductible for tax purposes 138 446
Future income tax benefit not brought to account 259 286
------------------ ------------------
Current tax charge for period - -
================== ==================
No deferred tax asset has been recognised because there is uncertainty of the timing of suitable
future profits against which they can be recovered.
Year ended 18 Months ended
31 December 2014 31 December 2013
6 Finance costs GBP000's GBP000's
Loan Interest 9 -
Finance fees 43 -
Share-based payments 32 -
------------------ ------------------
Total 84 -
================== ==================
Year ended 18 Months ended
31 December 2014 31 December 2013
7 Finance revenue GBP000's GBP000's
Interest on cash deposits 27 26
================== ==================
Year ended 18 Months ended
31 December 2014 31 December 2013
8 Loss per share GBP000's GBP000's
The calculation of loss per share is based on the loss after taxation
divided by the weighted
average number of shares in issue during the period:
Net loss after taxation (GBP000's) (1,848) (3,117)
Number of shares
Weighted average number of ordinary shares for the purposes of basic loss
per share (millions) 4,747.2 3,960.3
Basic and diluted loss per share (expressed in pence) (0.04) (0.08)
================== ==================
As inclusion of the potential ordinary shares would result in a decrease in the earnings per
share they are considered to be anti-dilutive, as such, a diluted earnings per share is not
included.
9 Intangible assets
Deferred exploration expenditure Total
GBP000's GBP000's
Cost
As at 30 June 2012 8,661 3,756
--------------------------------- ----------
Additions 1,446 4,905
As at 31 December 2013 10,107 8,661
--------------------------------- ----------
Additions 994 1,446
As at 31 December 2014 11,101 10,107
--------------------------------- ----------
Accumulated amortisation and impairment
As at 30 June 2012 - -
Impairment charge 1,658 -
Balance at 31 December 2013 1,658 -
--------------------------------- ----------
Impairment charge 400 1,658
Balance at 31 December 2014 2,058 1,658
--------------------------------- ----------
Net book value
As at 31 December 2014 9,043 8,449
--------------------------------- ----------
As at 31 December 2013 8,449 8,661
--------------------------------- ----------
Impairment Review
At 31 December 2014, the directors have carried out an impairment review and have considered
that a further impairment write-down of GBP400,000 is required against the Company's 28.56%
direct working interest in all of Reef Resources Limited's (Reef) Ontario properties (2013:
GBP1,658,000). This impairment charge reflects a revised value of the Company's entire 28.56%
interest of approximately CAD$1.1 million. (2013: GBP1 million).
10 Available for sale financial assets
31 December 2014 31 December 2013
Investment in listed and unlisted securities GBP000's GBP000's
Valuation at beginning of the period 816 -
Additions at cost 713 816
Foreign exchange (loss) (3) -
Decrease in value of listed investment (4) -
------------------- -------------------
Valuation at the end of the period 1,522 816
=================== ===================
The available for sale investments splits are as below:
Non-current assets - listed 106 -
Non-current assets - unlisted 1,416 816
------------------- -------------------
1,522 816
On 4 February 2014, the Company completed the acquisition of a 10% shareholding in Horse Hill
Developments Ltd ("HHDL"), a company incorporated in England & Wales, with investments in
the UK, for a total cash consideration of GBP600,000.
On 21 May 2013, the Company completed the acquisition of a 15% shareholding in Pan Minerals
Oil & Gas A.G.("Pan Minerals") , a company incorporated and resident in Switzerland, with
investments in Africa, for a total consideration of GBP500,000, of which GBP200,000 was cash
consideration and GBP300,000 by way of the issue of 60 million Ordinary shares in Solo. On
18 October 2013, the Company acquired a further 4.9% shareholding in Pan Minerals for a cash
consideration of US$500,000 (GBP316,000). Pan Minerals is not listed on any stock exchange.
Available-for-sale investments comprise investments in unlisted and listed securities which
are traded on stock market throughout the world, and are held by the Company as a mix of strategic
and short term investments.
11 Investment in subsidiaries
31 December 31 December
2014 2013
GBP000's GBP000's
As at 1 July - -
Additions - -
At 31 December - -
------------------- --------------
The subsidiaries of Solo Oil Plc, all of which
are dormant, and have been since incorporation,
are as follows:
Proportion
Country of ownership
Name of incorporation interest
Solo Oil International Limited UK 100%
12 Trade and other receivables
31 December 2014 31 December 2013
Current trade and other receivables GBP000's GBP000's
Loan to HHDL 210 -
Prepayments 41 52
Other debtors 723 1,239
---------------------- ----------------------
974 1,291
====================== ======================
The directors consider that the carrying amount of trade and other receivables approximates
to their fair value.
13 Derivative financial instrument
31 December 2014 31 December 2013
Equity Swap GBP000's GBP000's
Fair value at 1 January - -
Cost of equity swap arrangement 750 -
Provision at 31 December (261) -
-------------------------- --------------------------
Fair value at 31 December 489 -
========================== ==========================
On 24 September 2014, the Company announced that it had entered into an equity swap arrangement
("the Equity Swap Agreement") with YAGM over 157,894,737 of the Subscription Shares ("the
Swap Shares"). In return for a payment by the Company to YAGM of GBP750,000, twelve monthly
settlement payments in respect of such payment were to be made by YAGM to the Company, or
by the Company to YAGM, based on a formula related to the difference between the prevailing
market price (as defined in the Equity Swap Agreement) of the Company's ordinary shares in
any month and a "benchmark price" that is 5% above the Subscription Price. Thus the funds
received by the Company in respect of the Swap Shares are dependent on the future price performance
of the Company's ordinary shares.
YAGM may elect to terminate the Equity Swap Agreement and accelerate the payments due under
it in certain circumstances. The Company may pause a monthly payment under the Equity Swap
Agreement once in each six month period. YAGM has agreed that it and its affiliates will refrain
from holding any net short position in respect of the Company's ordinary shares until the
expiry or, if earlier, the termination of the Equity Swap Agreement.
By 31 December 2014, no swaps had been closed out and no payments received from or made to
YAGM. The full remaining balance has been fair valued at 31 December 2014, resulting in a
provision with the resultant charge disclosed in the Income Statement.
On 27 March 2015, the Company agreed in exchange for a deferral payment of US$50,000 to YAGM
to defer the start of the settlement Dates under the Swap Agreement until 1 May 2015.
14 Trade and other payables
31 December 2014 31 December 2013
Current trade and other payables GBP000's GBP000's
Trade payables 125 66
Other creditors - 32
Accruals 55 18
180 116
======================== ========================
The directors consider that the carrying amount of trade payables approximates to their fair
value.
15 Borrowings
31 December 2014 31 December 2013
Current trade and other payables GBP000's GBP000's
Loans - other (unsecured) 536 -
536 -
======================== =======================
On 24 September 2014, the Company agreed a US$5million debt facility with YA Global Master
SPV ("YAGM"), and drew down the first US$1million on that date. This loan carries a twelve
month repayment schedule at a fixed coupon of 10%. Any subsequent drawdowns will be on the
same terms and subject to approval by YAGM.
16 Share capital
Number of shares Nominal value
GBP000's
a) Called up, allotted, issued and fully paid: Ordinary shares of 0.01p
each
----------------- --------------
As at 30 June 2012 2,687,550,023 269
----------------- --------------
26 July 2012 - ELF for cash at 0.40p 90,844,685 9
9 August 2012 - Placing for cash at 0.30p 500,000,000 50
7 December 2012 - Issue for cash at 0.01p 150,000,000 15
11 January 2013 - Placing for cash at 0.45p 333,333,333 33
4 March 2013 - Placing for cash at 0.50p 200,000,000 20
11 March 2013 - Placing for cash at 0.50p 200,000,000 20
15 March 2013 - Placing for cash at 0.40p 375,000,000 38
21 May 2013 - Non- cash issue on acquisition of Pan Minerals at 0.30p 60,000,000 6
As at 31 December 2013 4,596,728,041 460
================= ==============
25 June 2014 - Placing for cash at 0.28p 178,571,429 18
3 October 2014 - Placing for cash at 0.95p 237,894,737 23
As at 31 December 2014 5,013,194,207 501
================= ==============
b) Deferred shares
Deferred shares of 0.69 pence each (2013: 265,324,634) 265,324,634 1,831
================= ==============
c) Total Share options in issue
During the year 100 million options were granted (2013: 68.5 million).
As at 31 December 2014 the options in issue were:
Exercise Price Expiry Date Options in Issue
31 December 2014
1.54p 30 April 2018 7,000,000
0.5p 31 December 2020 204,000,000
0.5p 31 December 2015 28,000,000
0.5p 31 December 2020 68,500,000
0.3p 31 December 2020 100,000,000
407,500,000
---------------------------------
No options were exercised during the period (2013: nil).
No options lapsed during the period (2013: 20million).
No options were cancelled during the period (2013: nil).
d) Total warrants in issue
During the year, 16,624,610 warrants were issued with a subscription price of 1.2p per share
(2013: 375million).
No warrants lapsed or were cancelled or exercised during the year (2013: 393,550,000).
As at 31 December 2014 the 16,624,610 warrants at 1.2p per share were outstanding. (2013:nil)
17 Share based payment
During the year the Company issued options for
consultancy services provided and warrants as
part of finance charges in relation to loan draw-down
financing.
During the period to 31 December 2013 warrants
were issued to investors as part of equity placements.
31 December 31 December
2014 2013
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
Outstanding at the
beginning of the
period 0.5 307,500,000 0.6 277,550,000
Granted during the
period - warrants - - 0.4 375,000,000
Granted during the
period - options 0.3 100,000,000 0.5 68,500,000
Forfeited during - - - -
the period
Cancelled during - - - -
the period - options
Exercised during - - - -
the period
Lapsed during the
period - options - - (0.5) (20,000,000)
Lapsed during the
period - warrants - - (0.45) (393,550,000)
---------------- ------------ --------------- --------------
Outstanding at the
end of the period
- Options 407,500,000 307,500,000
---------------- ------------ --------------- --------------
The exercise price of options outstanding at the
end of the year ranged between 1.54p and 0.30p.
The 16,624,610 warrants with a subscription price
of 1.2p per ordinary share were granted to YA
Global Master SPV in relation to the draw-down
of US $1 million based on a notional 5% fee (GBP32,000).
The weighted average fair value of each option
granted during the period was 0.3p (2013: options
0.5p).
The Group used the Black-Scholes model to determine
the value of the options and the inputs were as
follows:
Issue 7/07/2014 Issue 23/11/12
Share price at
grant (pence) 0.31 0.43
Fair Value price
at grant (pence) 0.21 0.35
Expected volatility
(%) 68.3% 89.5%
Expected life (years) 6.5 years 8.1 years
Risk free rate
(%) 4.0% 4.0%
Expected dividends nil Nil
(pence)
Expected volatility was determined by using the
volatility rate used by listed companies in similar
industries and those companies with similar sizes.
The total share-based payment expense in the year
for the Company was GBP208,000 expense in relation
to options (2013: GBP240,000 expense) and GBP32,000
finance charges in relation to warrants (2013:
GBPnil).
Employee Benefit Trust
The Company established on 7 December 2012, an
employee benefit trust called the Solo Oil Employee
Benefit Trust ("EBT") to implement the use of
the Company's existing share incentive plan over
5% of the Company's issued share capital from
time to time in as efficient a manner as possible
for the beneficiaries of that plan. The EBT is
a discretionary trust for the benefit of directors
and employees of the Company and its subsidiaries.
Accordingly, the trustees of the EBT subscribed
for 150,000,000 new ordinary shares of 0.01p each
in the Company, at par value per share at an aggregate
cost to the Company of GBP15,000, such shares
representing 4.58% of the existing issued share
capital of the Company (at that date). The shares
held in the EBT are intended to be used to satisfy
future awards made by the Company's Remuneration
Committee under the share incentive scheme, as
detailed in the Company's AIM admission document.
18 Financial instruments
The Company is exposed through its operations
to one or more of the following financial risks:
-- Fair value or cash flow interest rate risk
-- Foreign currency risk
-- Liquidity risk
-- Credit risk
-- Market risk
Policy for managing these risks is set by the
Board. The policy for each of the above risks
is described in more detail below.
Fair value and cash flow interest rate risk
Currently the Company does not have external borrowings.
However, the Company has a policy of holding debt
at a floating rate. The directors will revisit
the appropriateness of this policy should the
Company's operations change in size or nature.
Operations are not permitted to borrow long-term
from external sources locally.
Foreign currency risk
Foreign exchange risk arises because the Company
has operations located in various parts of the
world whose functional currency is not the same
as the functional currency in which the company's
investments are operating. The Company's net assets
are exposed to currency risk giving rise to gains
or losses on retranslation into sterling. Only
in exceptional circumstances will the Company
consider hedging its net investments in overseas
operations as generally it does not consider that
the reduction in volatility in consolidated net
assets warrants the cash flow risk created from
such hedging techniques.
Liquidity risk
The liquidity risk of each entity is managed centrally
by the treasury function. Each operation has a
facility with treasury, the amount of the facility
being based on budgets. The budgets are set locally
and agreed by the board annually in advance, enabling
the cash requirements to be anticipated. Where
facilities of entities need to be increased, approval
must be sought from the finance director. Where
the amount of the facility is above a certain
level agreement of the board is needed.
All surplus cash is held centrally to maximise
the returns on deposits through economies of scale.
The type of cash instrument used and its maturity
date will depend on the forecast cash requirements.
Credit risk
The Company is mainly exposed to credit risk from
credit sales. It is Company policy, implemented
locally, to assess the credit risk of new customers
before entering contracts. Such credit ratings
are taken into account by local business practices.
The Company does not enter into complex derivatives
to manage credit risk, although in certain isolated
cases may take steps to mitigate such risks if
it is sufficiently concentrated.
Market risk
As the company is now investing in listed companies,
the market risk will be that of finding suitable
investments for the company to invest in and the
returns that those investments will return given
the markets that in which investments are made.
19 Related party transactions
There were no transactions between the parent
and its subsidiary, which are related parties,
during the period. Details of director's remuneration,
being key personnel, are given in note 4. There
are no other related party transactions during
the year.
Remuneration of Key Management Personnel
The remuneration of the directors, and other key
management personnel of the Company, is set out
below in aggregate for each of the categories
specified in IAS24 Related party Disclosures.
Year ended 18 Months
ended
31 December 31 December
2014 2013
GBP'000s GBP'000s
Short-term employee benefits 357 411
Share-based payments - 150
------------- ------------
357 551
------------- ------------
20 Ultimate controlling party
In the opinion of the directors there is no controlling
party.
21 Retirement benefit scheme
The Company does not operate either a defined
contribution or defined benefit retirement scheme.
22 Commitments
As at 31 December 2014, the Company had no material
commitments.
23 Post balance sheet event
On 3 February 2015, the Company announced it had
signed the Asset Purchase Agreement with Aminex
Plc, for the first 6.5% interest in the Kiliwani
North Development Licence for a total consideration
of US$3,500,000. Further to this the deeds of
the original heads of terms had been amended to
allow Solo to purchase an additional 6.5% interest
in Kiliwani on the same terms up to 30 days after
the signing of the Gas Sales Agreement.
On 4 February 2015, the Company raised GBP700,000
gross proceeds through the issue of 140 million
ordinary shares in a placing at 0.5p per share.
On 26 March 2015, the Company drew down a further
US$500,000 from the YAGM debt facility, and issued
to YAGM, 15,328,167 warrants to purchase ordinary
shares at a price of 0.69p per share.
On 14 April 2015, the Company raised GBP2,000,000
gross proceeds through the issue of 363,636,364
ordinary shares in a placing at 0.55p per share.
On 29 April 2015, the Company announced it had
exchanged its shareholding in Pan Minerals Oil
and Gas AG for a direct holding of 15% in Burj
Petroleum Africa Ltd, a private UK registered
company pursuing interests in Nigeria. Solo has
also entered into an agreement to increase its
investment in Burj Africa with a closing payment
of US$200,000 in cash and as announced on 6 May
2015 the equivalent of US$300,000 in 39,750,000
new ordinary shares at an issue price of 0.51p.
Solo now holds a total interest of 20% in Burj
Africa.
Note to the announcement:
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the periods ended
31 December 2013 or 31 December 2014. The financial information for
the 18 months ended 31 December 2013 is derived from the statutory
accounts for that period. The audit of statutory accounts for the
year ended 31 December 2014 is complete. The auditors reported on
those accounts, their report was unqualified and did not include
references to any matters to which the auditors drew attention to
by way of emphasis without qualifying their report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EALKFFESSEFF
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