TIDMBPC
RNS Number : 0058X
Bahamas Petroleum Company PLC
25 April 2019
25 April 2019
Bahamas Petroleum Company plc
("BPC" or the "Company")
Final Results for the year ended 31 December 2018
Bahamas Petroleum Company plc, the oil and gas exploration
company with significant prospective resources in licences in The
Commonwealth of The Bahamas is pleased to announce its Final
Results for the year ended 31 December 2018.
Period and post period highlights:
-- In April 2018 lodged an application for Environmental
Authorisation with the Government of The Bahamas, representing a
significant milestone for the Company operationally and the
necessary first step toward commencing offshore field activity;
-- In May 2018 signed a Confidentiality and Exclusivity
Agreement with a major international oil company for which the
Company received US$1 million in payments for a period of 4 months
of exclusivity. The Company reiterates the view that the
willingness of a major international oil company to pay to enter
into such exclusive negotiations to be validation of the technical
merits of the Company's project;
-- Appointed Macquarie Capital Markets Canada Ltd as an advisor
to assist the Company with various corporate initiatives with the
goal of securing funding for the initial exploration well;
-- Post period end (in February 2019), received formal
notification from the Government of The Bahamas that the (current)
second exploration period of the licences had been extended to 31
December 2020, providing certainty as to the Company's licence
term, tenure and primary work obligation as it continues to pursue
a farm-in or other funding solution for an initial exploration well
with the specific forward work programme for 2019 and 2020 to be
agreed in the coming months together with any future licence fees
due to 2020;
-- Cash as at 31 December 2018 of $2.2 million - post period end
raised a further $2.54m - such that BPC has sufficient working
capital to maintain the farm-out / funding process, the ongoing
environmental applications and necessary technical preparations for
offshore field activity through the extended licence period;
and
-- 2018 operating loss and total loss reduced approximately 29%
and 59% respectively against previous year. Significant cash saving
initiatives continued during the period, including the Board
agreeing to increase fee deferrals from 50% to 90%.
Simon Potter, Chief Executive Officer of Bahamas Petroleum
Company, said:
"2018 was a period of progress and consolidation for the
Company. Whilst we continue to be entirely focussed on securing the
funding needed to drill an initial exploration well, we now have
the working capital, Government support, clear and enacted
legislation and an adviser in place to achieve this. Further, the
surrounding industry circumstances are more favourable, with a
sustained recovery in the global oil price and renewed industry
interest in frontier exploration that will underpin moving this
exciting project forward. We would like to thank all our investors
and staff for their continued support and perseverance and look
forward to reporting on further developments to you over the course
of the coming year."
The Financial Statements for the Year Ended 31 December 2018 are
now available on the Company's website www.bpcplc.com.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Ends
For further information, please contact:
Bahamas Petroleum Company plc Tel: +44 (0) 1624
Simon Potter, Chief Executive Officer 647 882
Strand Hanson Limited - Nomad Tel: +44 (0) 20
Rory Murphy / James Spinney 7409 3494
Shore Capital Stockbrokers Limited Tel: +44 (0) 207
Jerry Keen / Toby Gibbs 408 4090
Camarco Tel: +44 (0) 20
Billy Clegg / James Crothers 3757 4983
www.bpcplc.com
Chairman's Report
Dear Shareholder,
2018 saw the continuation of several broad oil industry themes
that began to emerge in 2017.
The first was oil price stability, which remained in the range
of US$60 - US$70 per barrel, and with most analysts expecting that
to continue for the foreseeable future. This reflects both reduced
supply (mainly as a result of measures from OPEC and Russia to cut
excess) and increased demand (due to global economic growth - the
International Energy Agency is projecting an increase in total
demand during 2019 of approximately 1.4 million barrels per
day).
The second, and notwithstanding the demand growth and price
stability, was that underlying costs for exploration and production
companies remained contained at a lower level than previously. Due
to the enormous levels of investment in oilfield services during
the last boom cycle, there remains a significant amount of excess
capacity in the industry, with asset utilisation rates at historic
lows. When combined with efficiency increases that operators have
been able to achieve through the development of new drilling
techniques, services costs are expected to persist at their current
low levels for the near/medium term.
The third was a return to exploration activities by majors, and
in particular, high-impact deeper-water and frontier basins. In
this context, we are seeing signs of the Caribbean becoming an
industry "hot spot" for exploration. Moreover, the excess industry
capacity noted above is expected to allow the sector to enjoy a
significant increase in exploration activity without a commensurate
return to demand driven price inflation.
The aggregate result of these industry themes means that the
outlook for the exploration and production industry over the near
future is strong. This is supported by across the board
improvements in the reported financial performance of major oil
companies - the combination of stable prices, low costs and
increased global demand growth has seen Free Cash Flow per barrel
and Return On Capital Employed revert to positive, growth
territory.
This favourable broader industry backdrop comes at an ideal time
for our Group, with several developments meriting specific
comment.
In May 2018, the Group entered into an exclusivity agreement
with a major international oil company for a total period of four
months, and for which we were remunerated a total of $1 million.
Exclusive discussions were not continued beyond the agreement's
expiry in August 2018, but we were greatly encouraged by the
interest of a major international oil company, and in particular
their willingness to pay for exclusivity. In our view this amounted
to independent validation of both the technical merits of our
project and its attractiveness to global industry participants.
Also in May 2018 we were pleased to appoint Macquarie Capital
Markets Canada Limited ("Macquarie") as financial adviser to the
Group, with a mandate to assist in the process of securing finance
for our first exploration well. Macquarie brings to the table a
broad range of skills and experience, as well as an extensive
global network of contacts in the energy and finance
industries.
More recently, in February 2019, we secured from the Government
of The Bahamas a two year extension of the Group's southern
exploration licences, thus providing certainty as to our licence
term, tenure and work obligations. And in March 2019, following on
from the licence extension, we raised additional capital to
strengthen our balance sheet as we move forward in our process to
secure the finance for our first exploration well and thereafter
commence drilling.
In summary, 2018 set the scene for what we hope will be a
transformative period for the Group. Our industry is in good shape,
with stable oil prices, frontier exploration back on the global
agenda, and a return to profitability amongst industry
participants. And our Group is in good shape, with our licences
extended and thus providing clarity on our licence tenure and
obligations, working capital secured, advisers on board, and a high
quality drill-ready project that we know is capable of attracting
the interest of a major.
What remains is to deliver on our promise: to secure the funding
required for our initial exploration well, and to get drilling.
This remains the unwavering focus of the Board and management. I
look forward to reporting to shareholders on further developments
as they arise.
Yours sincerely,
Bill Schrader
Chairman
24 April 2019
Chief Executive Officer's Report
Dear Shareholder,
The year of 2018 was a period of optimism, progress and
consolidation for the Group, but also a period of considerable
frustration in that the merits of the technical case of the project
continued to be somewhat subordinated to lack of clarity on licence
term and tenure issues.
However, following an extended program of work and consultation
throughout 2018, in February 2019 the Group received notification
from the Government of The Bahamas that the term of its four
southern licences was extended by 2 years (to 31 December 2020).
The notification received made clear the obligation to drill an
initial exploration well during this time, whilst also confirming
that all other rights under the licence remain unchanged. The
notification received also stipulated that the Government and the
Group must in the coming months agree a forward work schedule for
2019 and 2020, and reconcile licence fees already paid to determine
any future licence fees which may be due up to the end of 2020.
The importance of this notification from the Government cannot
be understated. Whilst it took some time to establish, the Group is
now able to provide certainty to potential partners as we move
forward in our farm-out discussions, and has the clearest window
for many years to advance plans for and thereafter to drill the
initial exploratory well that we all wish to see.
2018 Operational Highlights
During 2018 several key operational developments continued to
move the project forward, consistent with its now clearly defined
execution schedule for the exploration well.
In April 2018, the Group filed its application for Environmental
Authorisation ("EA") with the Government of The Bahamas, as
required by the Petroleum Regulations introduced in The Bahamas in
2016, applicable to the Group's southern licences. This application
represented the required, and necessary, first step for commencing
field activities for an exploration well. The Government has
subsequently engaged Black & Veatch, a leading petroleum
industry consultant, to assist them with processing our EA
application. Black & Veatch previously advised the Government
in the process for the Group's Environmental Impact Assessment
("EIA"), filed in 2012 and accepted by the Government in the same
year.
In May 2018, the Group entered into a Confidentiality and
Exclusivity Agreement ("Agreement") with a major international oil
company. During the term of the Agreement the Group agreed to
engage solely with that oil major, rather than maintaining
negotiations with the broad range of parties we had been working
with hitherto. In exchange for this, the Group received cash
payments totalling $1 million. The Agreement expired in August
2018, was not extended and the Group subsequently resumed
discussions with various parties (discussions which remain ongoing
and which we expect will benefit from the recent licence extension
/ clarification of licence term and tenure). Whilst it was
disappointing that the period of exclusive negotiations did not
culminate in a concluded transaction, the Group considers the
willingness of a major international oil company to enter into
exclusive negotiations, and to pay a substantial amount for that
exclusivity, to be validation of the technical merits and strong
potential of the Group's project.
Also in May 2018, the Group appointed Macquarie Capital Markets
Canada Limited ("Macquarie") to act as its financial advisor. With
an extensive global network in the oil and gas space, as well as
the broader investment community, Macquarie has been assisting the
Group with respect to a full suite of solutions for the funding
required to execute an initial exploration well, both at the asset
and corporate level. With the Bahamian regulatory regime fully
enacted, and with a clear licence term through to the end of 2020
providing potential farm out partners with clarity as to tenure,
term, schedule and operating environment, Macquarie now has a clear
mandate to proceed on behalf of the Group with renewed impetus.
Finally, throughout 2018, the overall operating environment for
the Group continued to strengthen. Globally, oil prices rose
considerably and, in The Bahamas, the Government clearly indicated
support for the project in particular and the development of a
domestic hydrocarbon industry more generally. For example, in the
2018 budget statement, the Government endorsed a diversification of
the Bahamian economy and an expansion of its revenue base to create
more buoyant and resilient growth, with the Finance Minister
referencing a "Blue Economy" policy, seeking to maximise the
economic potential of The Bahamas' oceans, including specifically
"oil and gas production". Also, during the period the Government
sanctioned a large new refinery project on the island of Grand
Bahama, and a new Liquified Natural Gas facility on the island of
New Providence.
In May 2018, the Group raised additional working capital through
a successful placement with its brokers, Shore Capital, providing
approximately $1.3 million in additional funds. When combined with
the $1 million exclusivity payments received and the subscription
funds of approximately $300,000 received following the exercise of
warrants held by Shore Capital (in May and July of 2018
respectively) additional funding of approximately $2.6 million was
secured by the Group during the 2018 year. The Group closed the
year with approximately $2.2 million in freely available cash, and,
following expiry and release of the performance bond of $500,000 in
the year, restricted cash balances are now immaterial. Post year
end, the Group raised a further US$2.5 million through a placing of
new ordinary shares in March 2019. These funding inflows mean the
Group has the working capital it needs to continue to pursue a
farm-in or similar funding arrangement for an initial exploration
well on its southern licences over the extended licence term.
2018 Financial Highlights
In terms of financial performance for the period, overall, the
Group reported a reduction in operating loss and total loss of
approximately 29% and 59% respectively against the prior year.
These results were, however, significantly impacted by two key
events during the year, being changes to my contract and the
receipt of exclusivity payments totalling $1m as mentioned
above.
As announced on 6 August 2018, I agreed to terminate the ongoing
deferral of cash salary into conditional share entitlements, agreed
to write off all conditional cash and pension entitlements accrued
to the effective date of 1 July 2018, and agreed to a substantial
reduction in the overall level of my salary. The write-off of all
of these conditional cash and pension entitlements during the year,
which totalled $1,012,500 and $225,000 respectively, has resulted
in the release of corresponding amounts accrued in the financial
statements to date in respect of these liabilities. As a
consequence, the 'employee benefit expense' for the period includes
a credit of over $1.2 million, giving rise to a decrease overall in
the year of 77% for this cost line. Apart from quantifying an
immediate financial benefit to the Group, I believe these
write-backs also demonstrate my continued support for the project,
as further evidenced by my decisions to extend my contractual
commitment to the Group by a further 12 months to March 2020, which
was announced recently. In a similar vein, the Board agreed to
increase its fee deferrals to 90% from 50%, effective 1 January
2018, resulting in further ongoing cash savings to the Group,
although these savings are not reflected in the reported figure for
'employee benefit expense' due to the requirements of IFRS 2 that
the deferrals be treated as share based payments and expensed
during the year accordingly.
Other expenses for the period have increased by approximately
47% on the prior year, driven largely by the increase in
professional fees associated with the expansion of
partnership/investment related activity and the appointment of a
financial advisor, as noted above. It is worth highlighting,
however, that these increased costs directly relate to the
strategic objectives of the Group (i.e.: achieving a farm-out or
other financing for an initial exploration well) and have been
incurred against the backdrop of raising $2.6 million from
exclusivity payments and equity issuances during the year and $2.5
million post year end, as noted above.
Outlook for 2019 and Beyond
Going forward, everyone at the Group remains entirely focussed
on the singular task of seeing an initial exploration well
completed. The Group's current obligation - to safely implement an
environmentally responsible well prior to the end of 2020 - has
been clearly laid out by the Government in our recent licence
extension. The Group has not had the ability to demonstrate this
level of certainty of tenure for a considerable period of time.
Along with this, we have secured the working capital we need, the
Government is supportive, the legislative regime is clear and
enacted, and we have an adviser in place. At the same time, the
surrounding industry circumstances are favourable, with sustained
recovery in the global oil price, and renewed industry interest in
frontier exploration. In 2019 and 2020, we thus look forward to
delivering: securing the investment needed to drill an initial
exploration well and thereby move this exciting project
forward.
We would like to thank all our investors and staff for their
continued support and perseverance and look forward to reporting on
further developments to you over the course of the coming year.
Yours sincerely,
Simon Potter
Chief Executive Officer
24 April 2019
Corporate Governance
Bahamas Petroleum Company plc's shares are traded on the
Alternative Investment Market of the London Stock Exchange and as
such the Company is not subject to the requirements of the UK
Corporate Governance Code, though the Company is required to apply
a recognised corporate governance code, demonstrating how the
Company complies with such corporate governance code and where it
departs from it.
The Directors of the Company have formally taken the decision to
apply the QCA Corporate Governance Code (the "QCA Code") as the
standard against which the Company chooses to measure itself in
2018-2019. This QCA Code emphasises the need for well balanced,
effective boards, with a strong emphasis on overseeing risk
management aimed at protecting the Company from unnecessary risk to
enable the Company to secure its long-term future. In addition, the
QCA Code highlights the alignment of remuneration policies with
shareholder interests and sound shareholder relations. Further
information on the Company's application of the QCA Code is
available on the Company website at www.bpcplc.com.
The workings of the Board and its Committees
The Board of Directors
The Board meets regularly to discuss and consider all aspects of
the Group's and Company's activities. A Charter of the Board has
been approved and adopted which sets out the membership, roles and
responsibilities of the Board. The Board is primarily responsible
for formulating, reviewing and approving the Group's strategy,
budgets, major items of capital expenditure and acquisitions.
The Board currently consists of the Chairman, the Chief
Executive Officer, and four Non-executive Directors. All Directors
have access to the Company Secretary and the Company's professional
advisors.
Record of board meetings
There were ten board meetings of the parent entity of the Group
during the financial year.
Director Number of board meetings attended Number of board meetings eligible to attend
Simon Potter 10 10
William Schrader 10 10
James Smith 8 10
Adrian Collins 9 10
Edward Shallcross 10 10
Ross McDonald 10 10
Audit Committee
The Audit Committee comprises Edward Shallcross (Chairman),
James Smith and Ross McDonald. The Audit Committee is primarily
responsible for ensuring that the financial performance of the
Group is properly reported on and monitored, for reviewing the
scope and results of the audit, its cost effectiveness and the
independence and objectivity of the auditor. The Audit Committee
has oversight responsibility for public reporting and the internal
controls of the Group. A Charter of the Audit Committee has been
approved and adopted which formally sets out the membership, roles
and responsibilities of the Audit Committee.
Remuneration Committee
The Remuneration Committee comprises Adrian Collins (Chairman),
William Schrader and Edward Shallcross. The Remuneration Committee
is responsible for making recommendations to the Board of Directors
regarding executive remuneration packages, including bonus awards
and share options.
Nomination Committee
The Nomination Committee comprises Adrian Collins, William
Schrader, Simon Potter and Edward Shallcross, and is chaired by
Adrian Collins. The role of the Nomination Committee is to assist
the Board in fulfilling its responsibilities in the search for and
evaluation of potential new Directors and ensuring that the size,
composition and performance of the Board is appropriate for the
scope of the Group's and Company's activities. It is recognised
that shareholders of the Company have the ultimate responsibility
for determining who should represent them on the Board.
Health, Safety, Environmental and Security Committee
The Group has a Health, Safety, Environmental and Security
Committee which comprised during the year William Schrader, Simon
Potter and the Group Environmental Scientist (Non-Board). The
committee's purpose is to assist the Directors in reviewing,
reporting and managing the Group's performance, to assess
compliance with applicable regulations, internal policies and goals
and to contribute to the Group's risk management processes.
Internal Control
The Directors acknowledge their responsibility for the Group's
system of internal control and for reviewing its effectiveness. The
system of internal control is designed to manage the risk of
failure to achieve the Group's strategic objectives. It cannot
totally eliminate the risk of failure but will provide reasonable,
although not absolute, assurance against material misstatement or
loss.
Going Concern
The Directors consider that the Group and Company has adequate
financial resources to enable it to meet its financial obligations
for at least 12 months from the date of this report from existing
liquid cash resources. For this reason they continue to adopt the
going concern basis of preparing the financial statements. Further
information regarding the appropriateness of the use of the going
concern assumption in the basis of preparation can be found in note
4 to the consolidated financial statements.
Directors' report
Your Directors present their report and audited financial
statements of the Company and the consolidated Group (referred to
hereafter as the Group) consisting of Bahamas Petroleum Company plc
(the "Company") and the entities it controlled at the end of, or
during, the year ended 31 December 2018.
Directors
The following persons were Directors of the Company during the
financial year and to date:
Simon Potter
William Schrader
James Smith
Adrian Collins
Edward Shallcross
Ross McDonald
Further details of the above Directors can be found on the
Company's website: www.bpcplc.com.
Principal activity
The principal activity of the Group and the Company consists of
oil & gas exploration in The Commonwealth of The Bahamas.
Results and dividends
The results of the Group for the year show a loss for the year
ended 31 December 2018 of $1,307,455 (2017: loss of $3,213,316).
The total comprehensive loss for the year of $1,307,455 (2017: loss
of $3,213,316) has been transferred to the retained deficit.
The Directors do not recommend payment of a dividend (2017:
$nil).
Review of operations
On 26 April 2018 the Group lodged an application for
Environmental Authorisaton with the Government of the Bahamas. The
application for Environmental Authorisation was submitted in the
prescribed form as previously directed by the Ministry of
Environment and Housing, and advised by the Bahamas Environment,
Science and Technology Commission (the BEST Commission), in
accordance with Regulation 3 (1) of the Petroleum (Offshore
Environmental Protection and Pollution Control) Regulations 2016
("the Regulations"), part of the modernised and strengthened
requirements governing the petroleum industry in The Bahamas, which
took effect in July 2016. Environmental Authorisation represents
the first step in commencing offshore field activity under the
Regulations.
On 1 May 2018 the Company entered into a Confidentiality and
Exclusivity Agreement (the "Agreement") with a major international
oil company (the "Counterparty"). The Agreement provided the
Counterparty with a four month period during which it had exclusive
access to the Company data room and discussions with management.
Under the Agreement the Company was paid $250,000 per month by the
Counterparty, totalling $1,000,000 for the four month period of the
agreement, which expired on 31 August 2018.
On 22 May 2018 the Company appointed the Advisory and Capital
Markets Division of Macquarie Capital Markets Canada Limited
("Macquarie Capital") to act as advisor and assist the Company with
various partnership and corporate solutions to secure finance for
the Group's first exploration well. Macquarie Capital, a
wholly-owned subsidiary of Macquarie Group Limited, provides a full
suite of global corporate solutions with a leading presence in the
international energy sector.
On 29 May 2018 the Company raised GBP1,100,000, before expenses,
of additional working capital through a placing of 44,000,000 new
ordinary shares with the Company brokers, Shore Capital
Stockbrokers. During the year 18,240,000 warrants were exercised
raising an additional GBP222,000 in working capital for the
Group.
On 21 February 2019, the Group received notification from the
Bahamian Government of the extension of the term of its four
southern licences to 31 December 2020, with the requirement that
the Group commence an exploration well before the end of the
extended term.
On 22 March 2019, the Company raised $2.5 million of additional
finance before costs through the issue of 120 million new ordinary
shares to institutional investors at a subscription price of 1.6
pence per share.
Substantial shareholdings
The following table represents shareholdings of 3% or more
notified to the Company as at 31 December 2018:
Name Number of shares % of shareholding
Hargreaves Lansdown 237,416,757 15.10%
Interactive Investor 237,179,077 15.08%
Halifax Sharedealing 140,370,603 8.93%
Barclays Wealth 100,310,832 6.38%
IG Markets 80,919,786 5.15%
Equinity 63,320,020 4.03%
Directors' interests
The interests in the Company at the balance sheet date of all
Directors who held office on the Board of the Company at the year
end are stated below.
Shareholding and options
Number of Shares 31 Number of Share Options
December 2018 31 December 2018 Number of Shares Number of Share
31 December 2017 Options
Name 31 December 2017
Simon Potter 4,000,000 39,000,000 4,000,000 39,000,000
William Schrader 3,075,000 2,000,000 3,075,000 2,000,000
James Smith 1,850,000 1,000,000 1,850,000 1,000,000
Edward Shallcross 3,070,000 1,000,000 3,070,000 1,000,000
Ross McDonald 2,100,000 1,000,000 2,100,000 1,000,000
Adrian Collins 2,200,000 1,000,000 2,200,000 1,000,000
No options were exercised during the year. See note 18 to the
consolidated financial statements for further details.
Independent auditor
PricewaterhouseCoopers LLC, being eligible, has indicated its
willingness to continue in office in accordance with section 12(2)
of the Isle of Man Companies Act 1982.
By order of the Board
Benjamin Proffitt
Company Secretary
24 April 2019
Statement of Directors' responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable Isle of
Man law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. The Directors have elected to
prepare the Group and Company financial statements in accordance
with International Financial Reporting Standards ("IFRSs") as
adopted by the European Union. The financial statements are
required by law to give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of
the Group for that period.
In preparing the financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether IFRSs as adopted by the European Union have
been followed, subject to any material departures disclosed and
explained in the financial statements;
-- make judgments and estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and to enable them
to ensure that the financial statements comply with the Isle of Man
Companies Acts 1931 to 2004. They are also responsible for
safeguarding the assets of the Group and the Company and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
On behalf of the Board
Simon Potter
Director
24 April 2019
Independent auditor's report to the members of Bahamas Petroleum
Company plc
Report on the audit of the financial statements
Our opinion
In our opinion:
-- Bahamas Petroleum Company plc's consolidated financial
statements give a true and fair view of the state of the Group's
affairs as at 31 December 2018 and of its loss and its cash flows
for the year then ended in accordance with International Financial
Reporting Standards as adopted by the European Union;
-- Bahamas Petroleum Company plc's company financial statements
give a true and fair view of the state of the Company's affairs as
at 31 December 2018 and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as
adopted by the European Union as applied in accordance with the
provisions of the Isle of Man Companies Act 1982; and
-- the financial statements have been properly prepared in
accordance with the Isle of Man Companies Acts 1931 to 2004.
What we have audited
Bahamas Petroleum Company plc's consolidated and company
financial statements (the "financial statements") comprise:
-- the consolidated and company balance sheets as at 31 December 2018;
-- the consolidated statement of comprehensive income for the year then ended;
-- the consolidated and company statements of changes in equity for the year then ended;
-- the consolidated and company statements of cash flows for the year then ended; and
-- the notes to the financial statements, which include a
summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing ("ISAs"). Our responsibilities under those
standards are further described in the "Auditor's responsibilities
for the audit of the financial statements" section of our
report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Company in accordance with
the International Ethics Standards Board for Accountants' Code of
Ethics for Professional Accountants ("IESBA Code"). We have
fulfilled our other ethical responsibilities in accordance with the
IESBA Code.
Our audit approach
Overview
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we considered where the directors made
subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of
internal controls, including among other matters, consideration of
whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter How our audit addressed the key
audit matter
============================================== ===================================================================
Going concern
Refer to the Directors' report, Subsequent to the year end, the
note 2 and note 4 of the Group financial Company raised an additional $2.5
statements and note 2 of the Company million before expenses through
financial statements. the placing of 120 million new
shares. We vouched the net share
At 31 December 2018 the Group and placement proceeds to the bank
Company had cash and cash equivalents statement as having been received.
of $2.2 million (2017: $1.8 million) We assessed management's cash flow
and $2.2 million (2017: $1.8 million) model following this post balance
respectively. Based on the Group sheet event and we have concluded
and Company cash flow forecasts that the Directors' use of the
additional new funding or cost reductions going concern basis of accounting
were necessary in order for the in the preparation of the financial
Group and Company to continue operations statements is appropriate.
for the next 12 months.
In the event that additional funding
was not raised the going concern
basis of accounting may not have
been appropriate.
============================================== ===================================================================
Recoverability of the Group's intangible
exploration and evaluation assets
/ Recoverability of Company's investment
in subsidiaries and amount owed
by subsidiary undertakings
For intangible exploration and
Refer to note 4 of the Group financial evaluation assets, we critically
statements and note 3 of the Company evaluated management's assessment
financial statements. of each impairment trigger per
IFRS 6 Exploration for and Evaluation
At 31 December 2018 the carrying of Mineral Resources, including
value of the Group's intangible but not limited to:
exploration and evaluation assets
was $48.5 million (2017: $48.3 million), * Assessing whether the Group had the rights to explore
as disclosed in note 13 to the consolidated in the relevant geographical areas by obtaining
financial statements. As the carrying supporting documentation such as licence agreements.
value of these intangible exploration
and evaluation assets are significant
in the financial statements of the * Enquiring to determine whether management had the
Group, we consider it necessary intention to carry out exploration and evaluation
to assess whether any facts or circumstances activity in the relevant exploration areas. We
exist to suggest that the carrying reviewed management's cash flow forecast models to
amount of these assets may exceed assess the level of the budgeted expenditure on these
their recoverable amount. areas.
The Company's investment in subsidiaries
totalled $29.6 million (2017: $29.6 * Critically assessing whether any impairment
million) and amount owed by subsidiary indicators were present to suggest that the carrying
undertakings $63.0 million (2017: value of these exploration and evaluation assets is
$62.3 million). The recoverability unlikely to be recovered through development or a
of the Company's investment in subsidiaries sale.
and amount owed by subsidiary undertakings
are dependent upon the successful
development or sale of the relevant
exploration areas. Having completed our work, we did
not identify any material misstatements
regarding the carrying value of
the intangible exploration and
evaluation assets. As a result,
the recoverability of the Company's
investment in subsidiaries and
amount owed by subsidiary undertakings
is not impaired.
============================================== ===================================================================
Other information
The other information comprises all of the information in the
Annual Report and Financial Statements other than the Financial
Statements and our auditors report thereon. The directors are
responsible for the other information.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial
statements
The directors are responsible for the preparation of the
financial statements that give a true and fair view in accordance
with International Financial Reporting Standards as adopted by the
European Union and Isle of Man law, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and Company's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group and Company or to cease operations, or have no realistic
alternative but to do so.
The directors are responsible for overseeing the Group's and
Company's financial reporting process.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group's and Company's internal
control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the directors.
-- Conclude on the appropriateness of the directors' use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's and
Company's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However, future
events or conditions may cause the Group and Company to cease to
continue as a going concern. For example, the terms on which the
United Kingdom may withdraw from the European Union are not clear
and it is difficult to evaluate all of the potential implications
on the Group, the Company and the wider economy.
-- Evaluate the overall presentation, structure and content of
the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
-- Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other
matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have
complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with the directors, we determine
those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the
key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
This report, including the opinion, has been prepared for and
only for the Company's members as a body in accordance with Section
15 of the Isle of Man Companies Act 1982 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Report on other legal and regulatory requirements
Adequacy of accounting records and information and explanations
received
Under the Isle of Man Companies Acts 1931 to 2004 we are
required to report to you by exception if, in our opinion:
-- we have not received all the information and explanations we require for our audit;
-- proper books of account have not been kept, or proper returns
adequate for our audit have not been received from branches not
visited by us;
-- the company financial statements are not in agreement with
the books of account and returns; and
-- certain disclosures of directors' loans and remuneration
specified by law have not been complied with.
We have no exceptions to report arising from this
responsibility.
Andrew Dunn
for and on behalf of PricewaterhouseCoopers LLC
Chartered Accountants, Isle of Man
24 April 2019
Consolidated statement of comprehensive income for the year
ended 31 December 2018
Note
2018 2017
Group Group
$ $
Continuing operations
Employee benefit expense 7 (458,923) (1,993,171)
Depreciation expense 12 (30,798) (21,508)
Other expenses 8 (1,823,042) (1,238,397)
Operating loss (2,312,763) (3,253,076)
Other income 6 1,000,000 36,253
Finance income 6 5,308 3,507
Loss before tax (1,307,455) (3,213,316)
Taxation 9 - -
Loss for the year (1,307,455) (3,213,316)
Total comprehensive
expense for the year (1,307,455) (3,213,316)
Loss per share
attributable to owners
of the Company:
Basic and diluted loss
per share (expressed in
cents
per share) 10 (0.08) (0.24)
Consolidated balance sheet as at 31 December 2018
Note 2018 2017
Group Group
$ $
ASSETS
Non-current assets
Intangible exploration and
evaluation assets 13 48,515,200 48,318,079
Property, plant and equipment 12 45,692 41,278
Total non-current assets 48,560,892 48,359,357
Current assets
Restricted cash 11 25,480 527,063
Other receivables 15 705,635 729,292
Cash and cash equivalents 14 2,220,765 1,838,527
Total current assets 2,951,880 3,094,882
Total assets 51,512,772 51,454,239
LIABILITIES
Current liabilities
Trade and other payables 16 354,422 1,098,512
Total liabilities 354,422 1,098,512
EQUITY
Share capital 17 46,138 44,481
Share premium reserve 17 83,068,307 81,398,084
Merger reserve 17 77,130,684 77,130,684
Reverse acquisition reserve 17 (53,846,526) (53,846,526)
Share based payment reserve 18 3,819,843 3,381,645
Retained deficit (59,060,096) (57,752,641)
Total equity 51,158,350 50,355,727
Total equity and liabilities 51,512,772 51,454,239
The consolidated financial statements were approved and
authorised for issue by the Board of Directors on 24 April 2019 and
signed on its behalf by:
Adrian Collins Simon Potter
Director Director
Consolidated statement of changes in equity for the year ended
31 December 2018
Share based
Share Reverse payment
Share premium Merger acquisition reserve Retained Total
capital reserve reserve reserve $ deficit equity
Note $ $ $ $ $ $
Balance at 1
January 2017 37,253 78,185,102 77,130,684 (53,846,526) 2,694,171 (54,539,325) 49,661,359
Comprehensive
income
Total
comprehensive
expense for
the year - - - - - (3,213,316) (3,213,316)
Total
Comprehensive
expense - - - - - (3,213,316) (3,213,316)
Transactions
with owners
Issue of
ordinary
shares 7,228 3,212,982 - - - - 3,220,210
Share options -
value of
services 18 - - 687,474 - 687,474
Total
transactions
with owners 7,228 3,212,982 - - 687,474 - 3,907,684
--------- ------------- ------------- --------------- ------------ --------------- --------------
Balance at 31
December 2017 44,481 81,398,084 77,130,684 (53,846,526) 3,381,645 (57,752,641) 50,355,727
--------- ------------- ------------- --------------- ------------ --------------- --------------
Balance at 1
January 2018 44,481 81,398,084 77,130,684 (53,846,526) 3,381,645 (57,752,641) 50,355,727
Comprehensive
income
Total
comprehensive
expense for
the year - - - - - (1,307,455) (1,307,455)
--------- ------------- ------------- --------------- ------------ --------------- --------------
Total
Comprehensive
expense - - - - - (1,307,455) (1,307,455)
Transactions
with owners
Issue of
ordinary
shares 1,657 1,670,223 - - - - 1,671,880
Share options -
value of
services 18 - - - - 438,198 - 438,198
Total
transactions
with owners 1,657 1,670,223 - - 438,198 - 2,110,078
--------- ------------- ------------- --------------- ------------ --------------- --------------
Balance at 31
December 2018 46,138 83,068,307 77,130,684 (53,846,526) 3,819,843 (59,060,096) 51,158,350
--------- ------------- ------------- --------------- ------------ --------------- --------------
Consolidated statement of cash flows for the year ended 31
December 2018
Note
2018 2017
Group Group
$ $
Cash flows from operating activities
Cash used in operations 19 (2,542,110) (2,173,444)
Net cash used in operating activities (2,542,110) (2,173,444)
Cash flows from investing activities
Purchase of property, plant and
equipment 12 (35,212) (18,241)
Payments for exploration and
evaluation assets 13 (197,121) (241,197)
Decrease in restricted cash 11 500,000 13,455
Other income received 6 1,000,000 36,253
Interest received 6 5,308 3,507
Net cash generated from / (used in)
investing activities 1,272,975 (206,223)
Cash flows from financing activities
Proceeds from issuance of ordinary
shares 17 1,671,880 3,220,210
Net cash flows from financing
activities 1,671,880 3,220,210
Net increase in cash and cash
equivalents 402,745 840,543
Cash and cash equivalents at the
beginning of the year 14 1,838,527 970,021
Effects of exchange rate changes on
cash and cash equivalents (20,507) 27,963
Cash and cash equivalents at the end
of the year 14 2,220,765 1,838,527
1 General information
Bahamas Petroleum Company plc ("the Company") and its
subsidiaries (together "the Group") is the holder of several oil
& gas exploration licences issued by the Government of the
Commonwealth of The Bahamas ("the Government").
The Company is a limited liability company incorporated in the
Isle of Man. The address of its registered office is IOMA House,
Hope Street, Douglas, Isle of Man. The Company's review of
operations is set out in the Directors' Report. The principal
activity of the Group and the Company consists of oil & gas
exploration in The Commonwealth of The Bahamas.
The Company has four directly and eleven indirectly 100% owned
subsidiaries as follows:
Name Country of Incorporation Holding
BPC (A) Limited Isle of Man 100% Direct
BPC (B) Limited Isle of Man 100% Direct
BPC (C) Limited Isle of Man 100% Direct
BPC (D) Limited Isle of Man 100% Direct
BPC Limited Bahamas 100% Indirect
BPC (A) Limited Bahamas 100% Indirect
BPC (B) Limited Bahamas 100% Indirect
BPC (C) Limited Bahamas 100% Indirect
BPC (D) Limited Bahamas 100% Indirect
BPC (E) Limited Bahamas 100% Indirect
Bahamas Offshore Petroleum Ltd Bahamas 100% Indirect
Island Offshore Petroleum Ltd Bahamas 100% Indirect
Sargasso Petroleum Ltd Bahamas 100% Indirect
Privateer Petroleum Ltd Bahamas 100% Indirect
Columbus Oil & Gas Limited Bahamas 100% Indirect
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of Bahamas Petroleum
Company plc (the "Financial Statements") reflect the results and
financial position of the Group for the year ended 31 December
2018, have been prepared in accordance with International Financial
Reporting Standards ("IFRS") and IFRIC ("International Financial
Reporting Interpretations Committee") interpretations as adopted by
the European Union ("EU"). These financial statements have been
prepared under the historical cost convention and the requirements
of the Isle of Man Companies Acts 1931 to 2004.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements are disclosed in note 4.
Going concern
The Directors have, at the time of approving these financial
statements, determined that the Group has adequate financial
resources and therefore these financial statements have been
prepared on a going concern basis, which assumes that the Group
will be able to meet its liabilities as and when they fall due. See
note 4 for further information.
Adoption of new and revised Standards
a) New standards, amendments and interpretations adopted
No new standards, amendments or interpretations, effective for
the first time for the financial year beginning on or after 1
January 2018 have had a material impact on the Group or the
Company.
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. 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 other comprehensive income and
fair value through profit or loss. The basis of classification
depends on the entity's business model and the contractual cash
flow characteristics of the financial asset. 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. Given the nature of the Group's operations, IFRS 9 has not
had a material impact.
b) 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 2018 and have not been applied in preparing these financial
statements. None of these are expected to have a significant effect
on the financial statements of the Group or the Company, except the
following, set out below:
IFRS 16, 'Leases' addresses the definition of a lease,
recognition and measurement of leases and establishes principles
for reporting useful information to users of financial statements
about the leasing activities of both lessees and lessors. A key
change arising from IFRS 16 is that most operating leases will be
accounted for on balance sheet for lessees. The standard replaces
IAS 17 'Leases', and related interpretations. The standard is
effective for annual periods beginning on or after 1 January 2019.
When IFRS 16 is implemented on 1 January 2019, additional land and
buildings of $47,200 will be recognised, together with an
additional lease liability of $47,200. In future periods, the
operating lease charge will be replaced by a depreciation charge
that is not expected to be materially different.
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is
achieved where the Company is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the
entity.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used in
line with those used by the Group.
All intra-group transactions, balances, income and expenses
(including unrealised gains and losses on transactions between
group companies) are eliminated on consolidation.
The financial statements consolidate the results, cash flows and
assets and liabilities of the Company and its wholly owned
subsidiary undertakings.
2.3 Operating segments
All of the Group's business activities relate to oil & gas
exploration activities in the Commonwealth of The Bahamas. The
business is managed as one business segment by the chief operating
decision maker ("the CODM"), who has been identified as the Chief
Executive Officer ("the CEO"). The CODM receives reports at a
consolidated level and uses those reports to assess business
performance. It is not possible to assess performance properly
using the financial information collected at the subsidiary
level.
2.4 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements and company
financial statements are presented in United States Dollars, which
is the functional currency of the Company and all of the Group's
entities, and the Group's and Company's presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denoted in foreign
currency are translated into the functional currency at exchange
rates ruling at the year end. Foreign exchange gains and losses
resulting from the settlement of transactions and from the
translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the
statement of comprehensive income.
2.5 Property, plant and equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
statement of comprehensive income during the reporting period in
which they are incurred.
Depreciation on assets is calculated using the straight--line
method to allocate their cost, net of their residual values, over
their estimated useful economic lives, as follows:
3 - 4 years
* Furniture, fittings and equipment
5 years
* Motor vehicles
Over the life of the lease
* Leasehold improvements
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount with any impairment charge being
taken to the statement of comprehensive income.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount and are recognised in the statement
of comprehensive income.
2.6 Intangible assets - exploration and evaluation assets
Exploration and evaluation expenditure incurred which relates to
more than one area of interest is allocated across the various
areas of interest to which it relates on a proportionate basis.
Exploration and evaluation expenditure incurred by or on behalf of
the Group is accumulated separately for each area of interest. The
area of interest adopted by the Group is defined as a petroleum
title.
Expenditure in the area of interest comprises direct costs and
an appropriate portion of related overhead expenditure but does not
include general overheads or administrative expenditure not linked
to a particular area of interest.
As permitted under IFRS 6, exploration and evaluation
expenditure for each area of interest, other than that acquired
from the purchase of another entity, is carried forward as an asset
at cost provided that one of the following conditions is met:
-- the costs are expected to be recouped through successful
development and exploitation of the area of interest, or
alternatively by its sale; or
-- exploration and/or 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 expenditure which fails to meet at
least one of the conditions outlined above is taken to the
statement of comprehensive income.
Expenditure is not capitalised in respect of any area of
interest unless the Group's right of tenure to that area of
interest is current.
Intangible exploration and evaluation assets in relation to each
area of interest are not amortised until the existence (or
otherwise) of commercial reserves in the area of interest has been
determined.
2.7 Impairment of intangible assets - exploration and evaluation assets
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount may
exceed its recoverable amount. In accordance with IFRS 6, the Group
reviews and tests for impairment on an ongoing basis and
specifically if the following occurs:
a) the period for which the Group has a right to explore in the
specific area has expired during the period or will expire in the
near future, and is not expected to be renewed;
b) substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither
budgeted nor planned;
c) exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable
quantities of mineral resources and the Group has decided to
discontinue such activities in the specific area; and
d) sufficient data exists to indicate that although a
development in the specific area is likely to proceed the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
An impairment loss is recognised for the amount by which the
asset's carrying value exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units).
2.8 Financial instruments
The Group has elected not to restate comparative information as
a consequence of the application of IFRS 9 as the amounts involved
are immaterial. As a result, the comparative information provided
continues to be accounted for in accordance with the Group's
previous accounting policy, which is set out below, together with
the accounting policies applied from 1 January 2018.
i) Financial assets - applied until 31 December 2017
The Group classified its financial assets in the following
categories: at fair value through profit or loss, loans and
receivables and available for sale. The classification depended on
the purpose for which the financial assets were acquired. The
classification of financial assets is determined at initial
recognition.
At 31 December 2017 the Group did not have any financial assets
held at fair value through profit or loss or classified as
available for sale. Loans and receivables were non-derivative
financial assets with fixed or determinable payments that were not
quoted in any active market. They were included in current assets,
except for those with maturities greater than 12 months after the
balance sheet date which were classified as non current assets.
Loans and receivables were stated initially at their fair value and
subsequently at amortised cost using the effective interest rate
method. The Group's loans and receivables consisted of 'cash and
cash equivalents' at variable interest rates, 'restricted cash' and
'other receivables' excluding 'prepayments'.
The Group assessed at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets was impaired. A financial asset or a group of
financial assets was impaired and impairment losses are incurred
only if there was objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event or events had an
impact on the estimated future cash flows of the financial asset or
group of financial assets that could be reliably estimated.
ii) Financial assets - applied from 1 January 2018
Classification
The Group classifies its financial assets as financial assets
held at amortised cost. Management determines the classification of
its financial assets at initial recognition.
The Group classifies its financial assets as at amortised cost
only if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect the contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payments of principal and interest.
Measurement
Financial assets held at amortised cost are initially recognised
at fair value, and are subsequently stated at amortised cost using
the effective interest method. Financial assets at amortised cost
comprise 'cash and cash equivalents' at variable interest rates,
'restricted cash' and 'other receivables' excluding
'prepayments'.
Impairment of financial assets
From 1 January 2018, the Group assesses on a forward looking
basis the expected credit losses associated with its financial
assets held at amortised cost. The impairment methodology applied
depends on whether there has been a significant increase in credit
risk.
The Group applies the expected credit loss model to financial
assets at amortised cost. Given the nature of the Group's
receivables, expected credit losses are not material.
iii) Financial liabilities
The Group classifies its financial liabilities as other
financial liabilities. Other financial liabilities are recognised
initially at fair value and are subsequently measured at amortised
cost using the effective interest method. Other financial
liabilities consist of 'trade and other payables'. These amounts
represent liabilities for goods and services provided to the Group
prior to the end of the financial period which are unpaid. The
amounts are unsecured and are usually paid within 30 days of
recognition.
2.9 Cash and cash equivalents
Cash and cash equivalents includes cash on hand and deposits
held at call with financial institutions with original maturities
of three months or less. For the purposes of the cash flow
statement, restricted cash is not included within cash and cash
equivalents.
2.10 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
deducted, net of tax, from the proceeds. Net proceeds are disclosed
in the statement of changes in equity.
2.11 Employee benefits
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non--monetary
benefits, expected to be settled within 12 months of the reporting
date are recognised in other payables in respect of employees'
services up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled.
(ii) Share based payments
Where equity settled share based instruments are awarded to
employees or Directors, the fair value of the instruments at the
date of grant is charged to the statement of comprehensive income
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 instruments that eventually vest. Market vesting
conditions are factored into the fair value of the instruments
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 equity instruments are granted to persons other than
employees or Directors, the statement of comprehensive income is
charged with the fair value of goods and services received.
(iii) Bonuses
The Group recognises a liability and an expense for bonuses.
Bonuses are approved by the Board and a number of factors are taken
into consideration when determining the amount of any bonus
payable, including the recipient's existing salary, length of
service and merit. The Group recognises a provision where
contractually obliged or where there is a past practice that has
created a constructive obligation.
(iv) Pension obligations
For defined contribution plans, the Group pays contributions to
privately administered pension plans. The Group has no further
payment obligations once the contributions have been paid. The
contributions are recognised as an employee benefit expense when
they are due.
(v) Termination benefits
Termination benefits are payable when employment is terminated
by the Group before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits when it is
demonstrably committed to a termination and when the entity has a
detailed formal plan to terminate the employment of current
employees without the possibility of withdrawal. Benefits falling
due more than 12 months after the end of the reporting period are
discounted to their present value.
2.12 Interest Income
Interest income is recognised on a time proportion basis using
the effective interest method.
2.13 Other Income
Other income is recognised in the period during which the
provision of entitlements or services to which the income relates
take place.
2.14 Leases
Leases in which a significant portion of the risks and rewards
of ownership are not transferred to the Group as lessee are
classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) are charged
to the statement of comprehensive income on a straight--line basis
over the period of the lease.
3 Financial risk management in respect of financial instruments
3.1 Financial risk factors
The Group's activities expose it to a variety of financial
risks: liquidity, market and credit risk. The Group's overall risk
management programme focuses on minimising potential adverse
effects on the financial performance of the Group.
Risk management is carried out by the CEO under policies
approved by the Board of Directors. The CEO identifies, evaluates
and addresses financial risks in close cooperation with the Group's
management. The Board provides written principles for overall risk
management, as well as written policies covering specific areas,
such as mitigating foreign exchange risk, interest rate risk,
credit risk and investing excess liquidity.
(i) Liquidity risk
The Group monitors its rolling cash flow forecasts and liquidity
requirements to ensure it has sufficient cash to meet its
operational needs. Surplus cash is invested in interest bearing
current accounts and money market deposits.
No profit to date
The Group has incurred losses since its inception and it is
therefore not possible to evaluate its prospects based on past
performance. Since the Group intends to continue investing in the
exploration licences it currently holds an interest in, the
Directors anticipate making further losses. There can be no
certainty that the Group will achieve or sustain profitability or
achieve or sustain positive cash flows from its activities.
Future funding requirements
The Group raises funding through the placing of ordinary shares
and farm-outs of its licences. There is no certainty that the
Company will be able to raise funding on the equity markets or that
the raising of sufficient funds through future farm-outs will be
possible at all or achievable on acceptable terms. This could
substantially dilute the Group's interest in the licences, however,
given the size of the Group's existing holding it would be
expected, although there is no guarantee, that the Group will
retain a significant equity interest in the licences.
Financial liabilities
The Group's financial liabilities comprise entirely its trade
and other payables which all fall due within 1 year. The Group's
payment policy is to settle amounts in accordance with agreed terms
which is typically 30 days.
(ii) Market risk
Foreign exchange risk
The Group operates internationally and therefore is exposed to
foreign exchange risk arising from currency exposures, primarily
with regard to UK Sterling. The exposure to foreign exchange risk
is managed by ensuring that the majority of the Group's assets,
liabilities and expenditures are held or incurred in US Dollars,
the functional currency of all entities in the Group. At 31
December 2018, the Group held $298,541 of cash in UK Sterling (31
December 2017: $785,907) and had an insignificant amount of trade
and other payables denominated in UK Sterling.
At 31 December 2018, if the US Dollar currency had
weakened/strengthened by 10% against UK Sterling with all other
variables held constant, post-tax losses for the year and total
equity would have been reduced/increased by approximately $30,000
(31 December 2017: reduced/increased by $79,000), mainly as a
result of foreign exchange gains/losses on translation of UK
Sterling denominated bank balances.
The Group also has operations denominated in the Bahamian
Dollar. As the Bahamian Dollar is pegged to the US Dollar on a one
for one basis these operations do not give rise to any currency
exchange exposures.
Interest rate risk
The Group's exposure to interest rate risk relates to the
Group's cash deposits which are linked to short term deposit rates
and therefore affected by changes in bank base rates. At 31
December 2018 and 2017 short term deposit rates were in the range
of 0% to 1.65% and therefore the interest rate risk is not
considered significant to the Group. An increase in interest rate
of 0.25% in the year would have had an insignificant effect on the
Group's loss for the year.
(iii) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from
cash and cash equivalents and restricted cash. For banks and
financial institutions, only independently rated parties with a
minimum rating of 'A' are accepted. In order to mitigate credit
risk arising from cash balances the Group holds cash reserves with
more than one counterparty.
3.2 Capital risk management
Capital is defined by the Group as all equity reserves,
including share capital and share premium. The Group's objectives
when managing capital are to safeguard the Group's ability to
continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to support the Group's business
operations and maximise shareholder value. The Group is not subject
to any externally imposed capital requirements.
4 Critical accounting estimates and judgments
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgment in
applying the Group's accounting policies. The areas that involved a
higher degree of judgment or complexity, as well as 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.
(a) Going concern
These financial statements have been prepared on a going concern
basis, which assumes that the Group will continue in operation for
the foreseeable future.
On 21 February 2019 the Group was notified by the Government of
the Bahamas that the term of its four southern licences had been
extended to 31 December 2020. Included in this notification was the
requirement that the Government and the Group work together to
determine the level of licence fees payable over the extended term,
if any, following consideration of fees prepaid to date. The
Directors have considered the range of potential outcomes for fees
payable over the duration of the extended licence term and consider
that even under the worst case scenario outcome of these
discussions, the Group is adequately financed to meet its working
capital needs for at least the next 12 months based on cash flow
forecasts and management's ability to effect further cost
reductions in the event that such action is deemed necessary. See
note 20 (iii) of these financial statements for greater detail.
The Group's ability to meet its obligations beyond the next 12
months is dependent on the level of exploration and appraisal
activities undertaken. The next step in the Group's asset
development programme requires the drilling of an exploration well
on its prospects before the end of the licence term. The ability of
the Group to discharge this obligation is contingent on the
successful completion of a farm-out arrangement or equity raise to
finance this activity.
(b) Carrying value of exploration expenditure
Expenditure of $48,515,200 relating to the cost of exploration
licences, geological and geophysical consultancy and seismic data
acquisition and interpretation has been capitalised as at 31
December 2018 (2017: $48,318,079).
The Group's exploration activities are subject to a number of
significant and potential risks including:
-- licence obligations;
-- requirement for further funding;
-- geological and development risks; and
-- political risk.
The recoverability of these intangible assets is dependent on
the discovery and successful development of economic reserves,
including the ability to raise finance to develop future projects
or alternatively, sale of the respective licence areas. The
carrying value of the Group's exploration and evaluation
expenditure is reviewed at each balance sheet date and, if there is
any indication that it is impaired, its recoverable amount is
estimated. Estimates of impairment are limited to an assessment by
the Directors of any events or changes in circumstances that would
indicate that the carrying value of the asset may not be fully
recoverable. Any impairment loss arising is charged to the
statement of comprehensive income.
On 26 April 2018 the Group filed its application for
Environmental Authorisation ("EA") as required by the Petroleum
(Offshore Environmental Protection and Pollution Control)
Regulations 2016 (the "Regulations"). Under these newly implemented
regulations, an application for Environmental Authorisation
represents the first step in commencing field activities and
therefore the submission of the application by the Group represents
an important milestone in the project and its development, with the
next key milestone being the execution of an exploration well
before the end of the current licence term. The Company is
presently in ongoing discussion with the Government in relation to
the process by which the application will be progressed in a timely
manner.
On 21 February 2019, the Group received notification from the
Bahamian Government of the extension of the term of its four
southern licences to 31 December 2020, with the requirement that
the Company commence an exploration well before the end of the
extended term.
In performing an assessment of the carrying value of the
exploration and evaluation assets at the reporting date, the
Directors concluded that it was not appropriate to book an
impairment given the remaining term of the licences, geological
probability of success of the structures and the continued plans to
explore and develop the block.
Renewal of the Miami licence remains under review as at the
balance sheet date.
5 Segment information
The Company is incorporated in the Isle of Man. The total of
non-current assets other than financial instruments located in the
Isle of Man as at 31 December 2018 is $21,815 (31 December 2017:
$7,884), and the total of such non-current assets located in The
Bahamas is $48,539,077 (31 December 2017: $48,351,474).
6 Finance income and Other income
2018 2017
Group Group
$ $
Finance income - interest income on
short-term bank deposits 5,308 3,507
Other income 1,000,000 36,253
Other income in 2018 arose from consideration received from a
potential farmout partner for the provision of a four month period
of exclusivity from 1 May 2018 to 31 August 2018 during which the
Company agreed to cease partnership discussions with other third
parties. Other income in the prior year arises from the subletting
of office space to a third party in the Bahamas.
7 Employee benefit expense
2018 2017
Group Group
$ $
Directors and employees salaries and
fees 1,091,718 1,087,548
Directors and employees salaries and (1,012,500) -
fees - writebacks*
Social security costs 60,583 51,364
Pension costs - defined contribution 74,089 124,621
Pension costs - defined contribution (225,000) -
- writebacks*
Share based payments (see note 18) 363,677 652,168
Other staff costs 106,356 77,470
458,923 1,993,171
Effective 1 October 2014, the Directors agreed to forgo 20% of
their remuneration which becomes repayable in shares only once the
Company's farm-out transaction or other arrangement for the
financing of the first exploration well has been successfully
completed.
Effective 1 April 2016, the Directors agreed to increase the
above fee deferral to 50% of their remuneration which becomes
repayable in shares only once the Company's farm-out transaction or
other arrangement for the financing of the first exploration well
has been successfully completed. In the case of Mr Potter, CEO,
this deferral is 90% of salary and is to be repaid in equal
proportions of shares and cash on the conclusion of a farm-out
transaction or other arrangement for the financing of the first
exploration well.
Effective 1 January 2018, the Directors agreed to increase the
above fee deferral to 90% of their remuneration which becomes
repayable only once the Company's farm-out transaction or other
arrangement for the financing of the first exploration well has
been successfully completed and is to be repaid in equal
proportions of shares and cash.
*Effective 1 July 2018 the Group entered into a revised
remuneration package with the CEO resulting in the cessation of
ongoing salary deferrals and the write back of provisions arising
from accrued salary and pension entitlements that were forgone by
the CEO under the terms of the revised remuneration agreement. As a
result, $1,012,500 (2017: $nil) of accrued salary entitlements have
been written back against the "Directors and employees salaries and
fees" expense category and $225,000 (2017: $nil) of accrued pension
entitlements have been written back against the "Pension costs -
defined contribution" expense category during the year. See note 21
for further details.
8 Other expenses
2018 2017
Group Group
$ $
Travel and accommodation 202,524 131,436
Operating lease payments 239,646 259,480
Legal and professional 944,106 549,446
Net foreign exchange
loss/(gain) 29,437 (24,039)
Other 314,001 259,522
Fees payable to the Company's
auditor for the audit
of the company and consolidated
financial statements 87,947 60,273
Fees payable to the
Company's auditor for
other services:
* Tax advisory services 5,381 2,279
Total auditor remuneration 93,328 62,552
Total other expenses 1,823,042 1,238,397
9 Taxation
The Company is incorporated and resident in the Isle of Man and
subject to Isle of Man income tax at a rate of zero per cent (2017:
zero per cent).
All other group companies are within the tax free jurisdiction
of the Commonwealth of The Bahamas. Under current Bahamian law, the
Bahamian group companies are not required to pay taxes in The
Bahamas on income or capital gains.
10 Basic and diluted loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss
attributable to the equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
2018 2017
Group Group
Loss attributable to equity
holders of the Company (US$) (1,307,455) (3,213,316)
Weighted average number of ordinary
shares in issue (number) 1,546,600,082 1,365,492,795
Basic loss per share (US Cents
per share) (0.08) (0.24)
(b) Diluted
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. The Company had one
category of dilutive potential ordinary shares: share
options/warrants. For these share options/warrants, a calculation
is performed to determine the number of shares that could have been
acquired at fair value (determined as the average annual market
share price of the Company's shares) based on the monetary value of
the subscription rights attached to outstanding share
options/warrants. The number of shares calculated as above is
compared with the number of shares that would have been issued
assuming the exercise of the share options/warrants. Share
options/warrants outstanding at the reporting date were as
follows:
2018 2017
Group Group
Total share options and warrants in
issue (number) (see note 18) 68,850,000 84,450,000
The effect of the above share options/warrants at 31 December
2018 and 2017 is anti-dilutive; as a result they have been omitted
from the calculation of diluted loss per share.
11 Restricted cash
2018 2017
Group Group
$ $
Current assets
Bank performance
bond - 500,000
Bank deposits 25,480 27,063
Total current restricted
cash 25,480 527,063
The Bank performance bond emplaced during 2015 was in favour of
the Government of the Bahamas. The bond formed a condition of the
2015 licence renewal and was released on expiry in 2018 given the
Company had satisfied the licence condition to undertake $750,000
of qualifying expenditure during the licence period.
Bank deposits consist of funds held as security for Company
credit card facilities. Amounts held at the year end have been
classified as current as they may be recovered at any point
following cancellation of the corporate credit card facilities.
12 Property, plant & equipment
Group
Leasehold Furniture,
Improvements fittings Motor
and equipment Vehicles Total
$ $ $ $
At 1 January
2017
Cost 56,417 256,041 97,689 410,147
Accumulated
depreciation (55,739) (243,595) (66,268) (365,602)
Net book amount 678 12,446 31,421 44,545
Year ended 31
December 2017
Opening net
book amount 678 12,446 31,421 44,545
Additions - 18,241 - 18,241
Depreciation
charge (678) (6,981) (13,849) (21,508)
Closing net
book amount - 23,706 17,572 41,278
At 31 December
2017
Cost 56,417 274,282 97,689 428,388
Accumulated
depreciation (56,417) (250,576) (80,117) (387,110)
Net book amount - 23,706 17,572 41,278
Year ended 31
December 2018
Opening net
book amount - 23,706 17,572 41,278
Additions - 35,212 - 35,212
Depreciation
charge - (16,949) (13,849) (30,798)
Closing net
book amount - 41,969 3,723 45,692
At 31 December
2018
Cost 56,417 309,494 97,689 463,600
Accumulated
depreciation (56,417) (267,525) (93,966) (417,908)
Net book amount - 41,969 3,723 45,692
13 Intangible exploration and evaluation assets
Group Geological,
Geophysical
and Technical
Licence Analysis Total
costs
$ $ $
Year ended 31 December
2017
Opening cost / net
book amount 2,851,250 45,201,407 48,052,657
Additions (note 20(iii)) - 265,422 265,422
Closing cost / net
book amount 2,851,250 45,466,829 48,318,079
Year ended 31 December
2018
Opening cost / net
book amount 2,851,250 45,466,829 48,318,079
Additions (note 20(iii)) - 197,121 197,121
Closing cost / net
book amount 2,851,250 45,663,950 48,515,200
Ultimate recoupment of intangible exploration and evaluation
assets capitalised is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective
licence areas (note 4(b)).
These assets are reviewed for impairment annually or whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. At present, the Directors do not
believe any such impairment indicators are present (note 4(b)).
14 Cash and cash equivalents
2018 2017
Group Group
$ $
Cash at bank 2,220,765 1,838,527
The 2018 balance includes interest bearing accounts at rates
between 0% and 1.65% (2017: 0% to 1%).
Reconciliation 2018 2017
of total cash balances Group Group
$ $
Cash at bank 2,220,765 1,838,527
Restricted cash
(see note 11) 25,480 527,063
Total cash 2,246,245 2,365,590
15 Other receivables
2018 2017
Group Group
$ $
Other receivables
(note (a)) 43,932 115,954
Prepayments (note
(b)) 661,703 613,338
705,635 729,292
(a) Other receivables
As at 31 December 2018 and 2017, these amounts predominantly
consist of VAT recoverable.
(b) Prepayments
As at 31 December 2018, prepayments include $500,000 (2017:
$500,000) in application fees paid to The Government of the Bahamas
for five additional exploration licences. During 2015, two of these
licence applications were withdrawn, consequently receipt of
$200,000 against these applications is expected to be credited
against future licence rental payments (see note 20(iii)). The
three retained applications remain pending award, in the event that
the Group's applications are unsuccessful, 50% of the remaining
$300,000 in application fees is refundable to the Group. No
provision has been made in the consolidated financial statements to
write down the carrying value of these prepayments.
16 Trade and other payables
2018 2017
Group Group
$ $
Accruals 334,984 1,053,922
Trade payables 19,438 40,496
Other payables - 4,094
354,422 1,098,512
The fair value of trade and other payables approximates to their
carrying value as at 31 December 2018 and 2017.
17 Share capital, share premium reserve, merger reserve and reverse acquisition reserve
Share Reverse
Number Issue Ordinary premium Merger acquisition
of shares price shares reserve reserve reserve
Group issued $ $ $ $ $
At 1
January
2017 1,230,479,096 - 37,253 78,185,102 77,130,684 (53,846,526)
Shares
issued 280,000,000 0.013 7,228 3,212,982 - -
At 31
December
2017 1,510,479,096 44,481 81,398,084 77,130,684 (53,846,526)
Shares
issued 15,600,000 0.013 416 207,343 - -
Shares
issued 46,640,000 0.033 1,241 1,462,880 - -
------------------- ---------- ------------- ---------------- ---------------- ------------------
As at 31
December
2018 1,572,719,096 46,138 83,068,307 77,130,684 (53,846,526)
------------------- ---------- ------------- ---------------- ---------------- ------------------
During the prior year the Company issued 110,000,000 new
ordinary shares on 21 June 2017 for 1 pence each and 170,000,000
new ordinary shares on 19 July 2017 for 1 pence each, raising gross
proceeds of $1,395,383 and $2,218,806 respectively. The costs
associated with the issuances in the year of $196,393 and $197,586
respectively have been deducted from the Share Premium reserve.
During the year the Company issued 44,000,000 new ordinary
shares on 29 May 2018 for 2.5 pence each raising gross proceeds of
$1,464,967.
Fees associated with the issuance totalling $87,898 have been
deducted from the Share Premium reserve.
During the year the Company issued 15,600,000 new ordinary
shares on 5 June 2018 and 2,640,000 new ordinary shares on 25 July
2018 for 1 pence and 2.5 pence each respectively in settlement of
the exercise of warrants held by the Company brokers, raising gross
proceeds of $207,759 and $87,052 respectively.
In 2008, BPC Jersey Limited acquired Falkland Gold and Minerals
Limited ('FGML') via a reverse acquisition, giving rise to the
reverse acquisition reserve. BPC Jersey Limited was the acquirer of
FGML although FGML became the legal parent of the Group on the
acquisition date. FGML subsequently changed its name to BPC
Limited.
The merger reserve arose in 2010 as a result of the Group
undergoing a Scheme of Arrangement which saw the shares in the then
parent company BPC Limited replaced with shares in Bahamas
Petroleum Company plc.
The total authorised number of ordinary shares at 31 December
2018 and 2017 was 5,000,000,000 shares with a par value of 0.002
pence per share. All issued shares of 0.002 pence are fully
paid.
18 Share based payments
A) Options and warrants
Share options have been granted to Directors, selected employees
and consultants to the Company.
The Group had no legal or constructive obligation to repurchase
or settle any options in cash. Movements in the number of share
options and warrants outstanding during the year are as
follows:
2018 2017
Group Group
Average exercise No. Options Average No. Options
price per & Warrants exercise & Warrants
share price per
share
At beginning of year 1.99p 84,450,000 2.22p 68,850,000
Exercised 1.22p 18,240,000 - -
Granted 2.50p 2,640,000 1.00p 15,600,000
At end of year 2.22p 68,850,000 1.99p 84,450,000
Exercisable at end of year - - 1.00p 15,600,000
The weighted average remaining contractual life of the options
and warrants in issue at 31 December 2018 is 2.25 years (31
December 2017: 2.93 years) and the weighted average exercise price
of these instruments is 2.22 pence per share (31 December 2017:
1.99 pence).
On 27 July 2017, the Company issued 15,600,000 warrants to Shore
Capital Stockbrokers in consideration of services rendered during
the fund raise in June 2017. The terms of the warrants granted are
as follows:
-- The warrants are exercisable from the date of grant.
-- The warrants expire on 14 July 2019.
-- The warrants have an exercise price of 1 pence per share.
All warrants granted to Shore Capital Stockbrokers during the
prior year were exercised on 29 May 2018.
The fair value of the warrants granted in the prior year was
estimated using the Black Scholes model. The inputs and assumptions
used in calculating the fair value of options granted in the year
were as follows:
Warrants Granted on 27
July 2017
-----------------------
Number of warrants
granted 15,600,000
-----------------------
Share price at date
of grant 1.10p
-----------------------
Exercise price 1.0p
-----------------------
Expected volatility 22%
-----------------------
Expected life 2.0 years
-----------------------
Risk free return 0.31%
-----------------------
Dividend yield Nil
-----------------------
Fair value per option 0.27 cents
-----------------------
On 22 May 2018, the Company issued 2,640,000 warrants to Shore
Capital Stockbrokers in consideration of services rendered during
the fund raise in May 2018. The terms of the warrants granted are
as follows:
-- The warrants are exercisable from the date of grant.
-- The warrants expire on 21 May 2020.
-- The warrants have an exercise price of 2.5 pence per share.
All warrants granted to Shore Capital Stockbrokers during the
year were exercised on 25 July 2018.
The fair value of the warrants granted in the year was estimated
using the Black Scholes model. The inputs and assumptions used in
calculating the fair value of options granted in the year were as
follows:
Warrants Granted on 22
May 2018
-----------------------
Number of warrants
granted 2,640,000
-----------------------
Share price at date
of grant 3.55p
-----------------------
Exercise price 2.5p
-----------------------
Expected volatility 58%
-----------------------
Expected life 0.17 years
-----------------------
Risk free return 0.83%
-----------------------
Dividend yield Nil
-----------------------
Fair value per option 1.44 cents
-----------------------
B) Salary deferrals
On 17 December 2014, the Directors entered into an agreement for
the deferral of 20% of their salary and fees on the following
terms:
-- 20% of all directors' fees and the CEO's salary were forgone
until a farm-out or other arrangement sufficient to finance the
first exploration well is completed.
-- The value of fees/salary forgone accrued at the end of each
month as an entitlement to ordinary shares in the Company.
-- The number of ordinary shares accrued was calculated as the
value of fees/salary forgone divided by the volume weighted average
closing price of the Company shares over each month.
-- The "accrued shares" shall only be issued to the directors on
completion of a farm-out or other arrangement sufficient to finance
the first exploration well.
-- The agreement is effective for all parties from 1 October 2014.
On 1 April 2016, the Directors entered into a further agreement
for the deferral of 50% of their fees and the CEO entered into an
agreement for the deferral of 90% of his salary on the following
terms:
-- 50% of all directors' fees and 90% of the CEO's salary are to
be forgone until a farm-out or other arrangement sufficient to
finance the first exploration well is completed.
-- The value of Directors fees forgone shall accrue at the end
of each month as an entitlement to ordinary shares in the
Company.
-- 50% of the value of the CEO's salary forgone shall accrue at
the end of each month as an entitlement to ordinary shares in the
Company.
-- 50% of the value of the CEO's salary forgone shall be
repayable in cash on settlement of the well financing criteria.
-- Receipt of the CEO's forgone salary is conditional on his
continued employment by the Group up to the completion of a
farm-out or other financing arrangement.
-- All of the CEO share entitlements accrued under the agreement
entered into on 1 October 2014 were forgone.
-- The number of ordinary shares accruing shall be calculated as
the value of fees/salary forgone divided by the volume weighted
average closing price of the Company shares over each month.
-- The "accrued shares" shall only be issued to the directors on
completion of a farm-out or other arrangement sufficient to finance
the first exploration well.
-- The agreement is effective for all parties from 1 April 2016
and, in the case of the CEO, supersedes the agreement entered into
on 17 December 2014.
On 1 January 2018 the Directors (excluding the CEO) entered into
a further agreement for the deferral of 90% of their fees on the
following terms:
-- 90% of all directors' fees are to be forgone until a farm-out
or other arrangement sufficient to finance the first exploration
well is completed.
-- 50% of the value of the directors' fees forgone shall accrue
at the end of each month as an entitlement to ordinary shares in
the Company.
-- 50% of the value of the directors' fees forgone shall be
repayable in cash on settlement of the well financing criteria.
-- The number of ordinary shares accruing shall be calculated as
the value of fees/salary forgone divided by the volume weighted
average closing price of the Company shares over each month.
-- The "accrued shares" shall only be issued to the directors on
completion of a farm-out or other arrangement sufficient to finance
the first exploration well.
From 1 July 2018 the ongoing deferral of the CEO's salary into
conditional share entitlements ceased, resulting in no further
share based payment charges arising as regards the CEO salary from
that date. See note 21 for further details.
Under IFRS 2, entitlements to ordinary shares under the above
agreements constitute the issuance of equity settled share based
payment instruments with the following terms:
-- Each month of deferred fee entitlements is treated as a
separate grant of options with the date of grant being the first
day of the month.
-- The Fair value of the options at grant is estimated as the
share price on the date of grant.
-- Options awarded each month vest at the end of that month.
The value of the instruments has been estimated and is being
charged to the Statement of Total Comprehensive Income in monthly
tranches as each month's award of options vest.
C) Expense arising from share-based payment transactions
Total expense arising from equity-settled share based payment
transactions:
2018 2017
Group Group
$ $
Options and warrants 74,521 24,509
Salary deferrals 363,677 638,740
Expense in relation to share based
payment transactions 438,198 663,249
The above charges in relation to share based payments include
$387,902 relating to Directors (2017: $647,516), $nil related to
staff and consultants (2017: $4,652) and $74,520 relating to
warrants granted to the Company's brokers (2017: $11,081). In 2017,
in addition to the above total charge to profits, $24,225 in share
based payments charges were capitalised into intangibles. During
the year, these consultants' fees were settled in cash.
Accordingly, these amounts have been written back and have acted to
reduce the total salary deferral share based payment charge for the
year.
19 Cash used in operations
2018 2017
Group Group
$ $
Loss after income tax (1,307,455) (3,213,316)
Adjustments for:
- Depreciation (note 12) 30,798 21,508
- Share based payment (note 18) 438,198 663,249
- Finance income (note 6) (5,308) (3,507)
- Other income received (note 6) (1,000,000) (36,253)
- Foreign exchange (gain)/loss on operating
activities (note 8) 29,437 (24,039)
Changes in working capital:
- Other receivables 18,110 (26,384)
- Trade and other payables (745,890) 445,298
Cash used in operations (2,542,110) (2,173,444)
The movement in Trade and other payables in the year includes
the write back of provisions for the CEO deferred salary forgone as
part of the agreed remuneration changes which became effective on 1
July 2018. See note 21 for further details.
20 Contingencies and commitments
(i) Contingencies
As at 31 December 2018 and 2017, the Group had no contingent
liabilities that require disclosure in these financial
statements.
(ii) Expenditure commitments
On 21 February 2019, the Company received notification from the
Bahamian Government of the extension of the term of its four
southern licences to 31 December 2020, with the requirement that
the Company commence an exploration well before the end of the
extended term.
As the Group does not have sufficient cash resources to
discharge this commitment, an industry partnership or other
financing arrangement will be required in order to meet this
licence obligation.
20
(iii) Annual rental commitments
The Group is required under the exploration licences to remit
annual rentals in advance to the Government in respect of the
licenced areas.
On 21 February 2019 the Group was notified by the Government of
the Bahamas that the term of its four southern licences had been
extended to 31 December 2020. During this extension, the Group and
the Government must, in the coming months:
(i) establish a forward process and schedule for 2019 and 2020
for the consideration and finalisation of the Environmental
Authorisation previously submitted by the Company in April 2018, in
accordance with the relevant Act and Regulations, and
(ii) determine any additional licence fees that may be payable
by the Company up to the end of 2020, when reconciled against:
a. Licence fees amount previously paid in good faith by the
Company (approximately US$1.05 million) despite the inability to
undertake Licence activities,
b. Licence fee levels previously established with the Government
(being US$250,000 per Licence per annum) as may be modified in view
of changed industry circumstances since Licence fee levels were
initially proposed in 2013 under very different then prevailing
circumstances,
c. Periods in which Licence activities were unable to be
undertaken owing to various disruptions beyond the control or
discretion of the Company, and during which Licence fees were
correspondingly abated, and
d. Other amounts presently held on account by the Government in relation to various other matters (approximately US$620,000).
In 2018 the Company submitted to the Government a proposed
reconciliation in respect of all of the above items, which
indicated a balance payment due to the Government of approximately
US$200,000 for Licence fees up to the end of 2020. This amount,
along with consideration of various sensitivities, has been taken
into account in determining the adequacy of working capital for the
next 12 months.
Renewal of the Group's Miami licence remains under review
pending negotiations with the Government regarding the terms of
renewal.
The Group leases various premises and vehicles under
non-cancellable operating lease agreements. The leases have varying
terms and renewal rights.
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
2018 2017
Group Group
$ $
No later than 1 year 107,952 151,257
Between 2 and 5 years 23,150 -
131,102 151,257
21 Related party transactions
Key Management Personnel
Details of key management personnel during the current and prior
year are as follows:
William Schrader Non-Executive Chairman
James Smith Non-Executive Deputy Chairman
Simon Potter Director and Chief Executive Officer
Adrian Collins Non-Executive Director
Ross McDonald Non-Executive Director
Edward Shallcross Non-Executive Director
21 Key Management Compensation
2018 2017
Group Group
$ $
Short term employee benefits - paid 270,580 362,093
Short term employee benefits - accrued
and contingent* (813,642) 450,000
Share based payments (see note 18) 387,902 647,516
(155,160) 1,459,609
*Short term employee benefits - accrued and contingent consist
of the 50% of directors' deferred fees which are repayable in cash,
rather than shares, contingent on the successful completion of a
farm-out transaction or other arrangement sufficient to finance the
project's first exploration well. Included in this figure is the
write back of deferred CEO remuneration which was forgone on 1 July
2018 following agreed changes to the CEO remuneration arrangements
(see below) which has resulted in a negative charge for the
year.
Directors' remuneration
2018 2017
Group Group
$ $
Simon Potter
Cash remuneration
- Salary (10% of contractual
entitlement from 1 January 2017) 50,000 100,000
- Salary (revised basis from 187,500 -
1 July 2018)
Total cash remuneration 237,500 100,000
Non-cash remuneration
- Salary (45% deferred and
contingent) 225,000 450,000
- Share based payments 225,000 457,606
- Write back of forgone deferred (1,012,500) -
salary
- Accrued pension liability 50,000 100,000
- Write back of forgone pension (225,000) -
entitlements
1,007,606
Total non-cash remuneration (737,500) 1,107,606
Total (500,000)
William Schrader
- Cash remuneration 8,649 41,989
- Deferred remuneration - cash 38,922 -
- Share based payments 42,646 49,462
- Total Remuneration 90,217 91,451
James Smith
- Cash remuneration 5,622 27,460
- Deferred remuneration - cash 25,296 -
- Share based payments 28,104 32,281
- Total Remuneration 59,022 59,741
Adrian Collins
- Cash remuneration 6,499 32,836
- Deferred remuneration - cash 29,245 -
- Share based payments 30,342 37,943
- Total Remuneration 66,086 70,779
Ross McDonald
- Cash remuneration 5,618 27,460
- Deferred remuneration - cash 25,283 -
- Share based payments 27,974 32,281
- Total Remuneration 58,875 59,741
Edward Shallcross
- Cash remuneration 6,692 32,348
- Deferred remuneration - cash 30,112 -
- Share based payments 33,836 37,943
- Total Remuneration 70,640 70,291
Total (155,160) 1,459,609
21
Effective 1 October 2014, the Directors agreed to forgo 20% of
their remuneration which becomes repayable in shares only once the
Company's first exploration well has been successfully financed.
Effective 1 April 2016 the Directors agreed to increase this fee
deferral to 50% for Board members and 90% for the CEO. See note 18
for further details. From 1 January 2018, the Directors agreed to
increase their fee deferral terms to match those of the CEO, being
a 90% deferral with 50% of deferred fees recoverable in cash and
50% in shares, following the conclusion of a successful farm-out or
other suitable financing arrangement.
On 3 August 2018 the Company entered into an agreement with the
CEO to effect the following changes to his remuneration
arrangements:
-- The agreement became effective from 1 July 2018.
-- From the effective date the CEO remuneration became $375,000 per annum.
-- Cessation of all salary deferrals from the effective date.
-- All salary that was deferred to 30 June 2018 into conditional
share entitlements is retained.
-- All salary that was deferred to 30 June 2018 to be recovered in cash was forgone.
-- All accrued pension entitlements to 30 June 2018 was forgone.
-- No ongoing entitlement to pension contributions
-- Term of the contract remains unchanged and expires on 31 March 2019.
As a result of the above, accrued cash salary entitlements
totalling $1,012,500 and accrued pension entitlements totalling
$225,000 have been written off in the year to the Employee benefit
expense line of the Statement of Comprehensive Income.
There were no share options granted to key management personnel
in the current or prior year.
Other related party transactions
During the year the Company operated banking facilities with RBC
Royal Bank (Bahamas) Limited in Nassau, The Bahamas. Ross McDonald,
a director of the Company, is also a director of RBC Royal Bank
(Bahamas) Limited. As at 31 December 2018, $39,448 was held on
deposit with RBC Royal Bank (Bahamas) Limited (31 December 2017:
$62,706).
22 Events After the Balance Sheet Date
On 21 February 2019, the Company received notification from the
Bahamian Government of the extension of the term of its four
southern licences to 31 December 2020, with the requirement that
the Company commence an exploration well before the end of the
extended term. Included in this licence extension was the
requirement that the Government and the Group work together to
develop a forward work program for the processing of the
Environmental Authorisation filed during the year as well as
determine the level of licence fees payable over the extended term,
if any, following consideration of the fees prepaid to date. See
note 20 (iii) for further details.
On 22 March 2019, the Company raised $2.5 million of additional
finance before costs through the issue of 120 million new ordinary
shares to institutional investors at a subscription price of 1.6
pence per share.
Company balance sheet as at 31 December 2018
2018 2017
Company Company
Note $ $
ASSETS
Non-current assets
Investment in subsidiaries 7 29,560,465 29,560,465
Other receivables 8 63,034,852 62,345,811
Property, plant and equipment 6 21,816 7,884
Total non-current assets 92,617,133 91,914,160
Current assets
Restricted cash 5 25,480 527,063
Other receivables 8 154,809 165,406
Cash and cash equivalents 9 2,181,331 1,775,822
Total current assets 2,361,620 2,468,291
Total assets 94,978,753 94,382,451
LIABILITIES
Current liabilities
Trade and other payables 10 264,813 1,093,385
Total liabilities 264,813 1,093,385
EQUITY
Share capital 11 46,138 44,481
Share premium reserve 11 83,068,307 81,398,084
Other reserve 11 29,535,159 29,535,159
Share based payment reserve 12 3,449,799 3,011,601
Retained deficit (21,385,463) (20,700,259)
Total equity 94,713,940 93,289,066
Total equity and liabilities 94,978,753 94,382,451
Company statement of changes in equity for the year ended 31
December 2018
Share
based
Share Share Other payment
capital premium Reserve reserve Retained Total equity
deficit
Note $ $ $ $ $ $
Balance
at 1 January
2017 37,253 78,185,102 29,535,159 2,324,127 (19,111,603) 90,970,038
Comprehensive
income:
Total
comprehensive
expense
for the
year 4 - - - - (1,588,656) (1,588,656)
------------ ---------------- ---------------- --------------- ------------------ -----------------
Total
Comprehensive
Expense - - - - (1,588,656) (1,588,656)
Transactions
with owners
Issue of
Ordinary
Shares 7,228 3,212,982 - - - 3,220,210
Share options
- value
of service 12 - - - 687,474 - 687,474
------------ ---------------- ---------------- --------------- ------------------ -----------------
Total
transactions
with owners 7,228 3,212,982 - 687,474 - 3,907,684
------------ ---------------- ---------------- --------------- ------------------ -----------------
Balance
at 31
December
2017 44,481 81,398,084 29,535,159 3,011,601 (20,700,259) 93,289,066
------------ ---------------- ---------------- --------------- ------------------ -----------------
Balance
at 1 January
2018 44,481 81,398,084 29,535,159 3,011,601 (20,700,259) 93,289,066
Comprehensive
income:
Total
comprehensive
expense
for the
year 4 - - - - (685,204) (685,204)
Total
Comprehensive
Expense - - - - (685,204) (685,204)
Transactions
with owners
Issue of
Ordinary
Shares 1,657 1,670,223 - - - 1,671,880
Share options
- value
of service 12 - - - 438,198 - 438,198
------------ ---------------- ---------------- --------------- ------------------ -----------------
Total
transactions
with owners 1,657 1,670,223 - 438,198 - 2,110,078
------------ ---------------- ---------------- --------------- ------------------ -----------------
Balance
at 31
December
2018 46,138 83,068,307 29,535,159 3,449,799 (21,385,463) 94,713,940
------------ ---------------- ---------------- --------------- ------------------ -----------------
Company statement of cash flows for the year ended 31 December
2018
2018 Company 2017
Note $ Company
$
Cash flows from operating activities
Cash used in operations 13 (2,150,706) (452,395)
Net cash used in operating activities (2,150,706) (452,395)
Cash flows from investing activities
Purchase of property, plant and equipment 6 (23,146) (3,933)
Other income 1,000,000 -
Interest received 5,308 3,507
Decrease in restricted cash 500,000 13,455
Advances to and payments on behalf
of group companies (577,320) (1,924,192)
Net cash generated from / (used in)
investing activities 904,842 (1,911,163)
Cash flows from financing activities
Proceeds from issuance of ordinary
shares 1,671,880 3,220,210
Net cash flows from financing activities 1,671,880 3,220,210
Net increase in cash and cash equivalents 426,016 856,652
Cash and cash equivalents at the beginning
of the year 1,775,822 891,207
Effects of exchange rate changes on
cash and cash equivalents (20,507) 27,963
Cash and cash equivalents at the end
of the year 2,181,331 1,775,822
1 General information
Bahamas Petroleum Company plc ("the Company") and its
subsidiaries (together "the Group") are the holders of several oil
& gas exploration licences issued by the Government of the
Commonwealth of The Bahamas ("the Government").
The Company is a limited liability company incorporated and
domiciled in the Isle of Man. The address of its registered office
is IOMA House, Hope Street, Douglas, Isle of Man. The Company's
review of operations and principal activities is set out in the
Directors' Report. See note 1 to the consolidated financial
statements for details of the Company's principal subsidiaries.
The accounting reference date of the Company is 31 December.
2 Accounting policies
2.1 Basis of preparation
The financial statements are prepared in accordance with
International Financial Reporting Standards ("IFRS") and IFRIC
("International Financial Reporting Interpretations Committee")
interpretations as adopted by the European Union ("EU"). The
financial statements have been prepared under the historical cost
convention and the requirements of the Isle of Man Companies Acts
1931 to 2004.
The Company's accounting policies and information regarding
changes in accounting policies and disclosures are in line with
those of the Group, as detailed in note 2 of the consolidated
financial statements, in addition to those set out below.
Going concern
The Directors have, at the time of approving the financial
statements, determined that the Company has adequate financial
resources and therefore these financial statements have been
prepared on a going concern basis, which assumes that the Company
will continue in operations for the foreseeable future. See note 4
in the consolidated financial statements for further details.
2.2 Investment in subsidiaries
Investments in subsidiaries are included in the Company balance
sheet at cost, less any provision for impairment.
2.3 Other receivables
The Company classifies its other receivables (excluding
prepayments) as financial assets held at amortised cost. See note
2.8 of the Group financial statements for the accounting policy
followed. Given that the amount owed by subsidiary undertakings is
repayable on demand, expected credit losses are not material. See
note 8 for further details.
3 Critical accounting estimates and judgments
Investment in subsidiary and amounts owed by subsidiary
undertakings
The investment in the Company's direct subsidiaries and amounts
owed by subsidiary undertakings at 31 December 2018 stood at
$29,560,465 (2017: $29,560,465) and $63,034,853 (2017: $62,345,811)
respectively.
Ultimate recoverability of investments in subsidiaries and
amounts owed by subsidiary undertakings is dependent on successful
development and commercial exploitation, or alternatively, sale of
the respective licence areas. The carrying value of the Company's
investments in subsidiaries is reviewed at each balance sheet date
and, if there is any indication of impairment, the recoverable
amount is estimated. Estimates of impairments are limited to an
assessment by the Directors of any events or changes in
circumstances that would indicate that the carrying values of the
assets may not be fully recoverable. Similarly, the expected credit
losses on the amounts owed by subsidiary undertakings are
intrinsically linked to the recoverable amount of the underlying
assets. Any impairment losses arising are charged to the statement
of comprehensive income.
See note 4(b) of the Group financial statements for more
details.
4 Loss attributable to members of the company
The loss dealt with in the financial statements of the Company
for the year to 31 December 2018 is $685,204 (2017: $1,588,656). As
permitted by part 1 section 3(5) of the Isle of Man Companies Act
1982, the Company has elected not to present its own statement of
comprehensive income for the year
5 Restricted cash
Restricted cash balances for the Company are the same as those
for the Group. Please see note 11 to the consolidated financial
statements for more details.
6 Property, plant and equipment
Company Furniture, fittings and
equipment
$
As at 1 January 2017
Cost 70,050
Accumulated depreciation (62,940)
Net book amount 7,110
Year ended 31 December
2017
Opening net book amount 7,110
Additions 3,933
Depreciation charge (3,159)
7,884
Closing net book amount
As at 31 December 2017
Cost 73,983
Accumulated depreciation (66,099)
Net book amount 7,884
Year ended 31 December
2018
Opening net book amount 7,884
Additions 23,146
Depreciation charge (9,214)
Closing net book amount 21,816
As at 31 December 2018
Cost 97,129
Accumulated depreciation (75,313)
Net book amount 21,816
7 Investment in subsidiaries
2018 Company 2017 Company
$ $
BPC (A) Limited 29,560,456 29,560,456
BPC (B) Limited 3 3
BPC (C) Limited 3 3
BPC (D) Limited 3 3
29,560,465 29,560,465
See note 1 of the group financial statements for details of the
indirectly owned subsidiary undertakings.
8 Other receivables
2018 Company 2017
$ Company
$
Non-current assets
Amount owed by subsidiary undertakings 63,034,852 62,345,811
Current assets
Prepayments 112,377 50,950
Other receivables 42,432 114,456
154,809 165,406
Amounts owed by subsidiary undertakings are unsecured, interest
free and repayable on demand. The Directors have agreed that
repayment of these amounts will not be called on within 12 months
of the reporting date.
Other receivables predominantly consist of VAT recoverable.
9 Cash and cash equivalents
2018 Company 2017
$ Company
$
Cash at bank 2,181,331 1,775,822
The 2018 balances include interest bearing accounts at rates
between 0% and 1.65% (2017: 0% to 1%).
10 Trade and other payables
2018 Company 2017
$ Company
$
Accruals 250,503 1,053,934
Trade payables 8,767 35,358
Other payables 5,543 4,093
264,813 1,093,385
The fair value of trade and other payables approximates their
carrying value as at 31 December 2018 and 2017.
11 Share capital, share premium and other reserve
Share
Number Ordinary premium Other
of shares shares reserve reserve Total
Company issued $ $ $ $
At 1 January 2017 1,230,479,096 37,253 78,185,102 29,535,159 107,757,514
Issue of Ordinary
Shares 280,000,000 7,228 3,212,982 - 3,220,210
At 31 December 2017 1,510,479,096 44,481 81,398,084 29,535,159 110,977,724
At 1 January 2018 1,510,479,096 44,481 81,398,084 29,535,159 110,977,724
Issue of Ordinary
Shares 62,240,000 1,657 1,670,223 - 1,671,880
----------------- -------------- -------------- -------------- ---------------
At 31 December 2018 1,572,719,096 46,138 83,068,307 29,535,159 112,649,604
All issued shares are fully paid.
The authorised share capital of the Company is 5,000,000,000
ordinary shares of 0.002 pence each.
During the prior year the Company issued 110,000,000 new
ordinary shares on 21 June 2017 for 1 pence each and 170,000,000
new ordinary shares on 19 July 2017 for 1 pence each, raising gross
proceeds of $1,395,383 and $2,218,806 respectively. The costs
associated with the issuances in the year of $199,183 and $202,024
respectively have been deducted from the Share Premium reserve
total.
During the year the Company issued 44,000,000 new ordinary
shares on 29 May 2018 for 2.5 pence each raising gross proceeds of
$1,464,967. Fees associated with the issuance totalling $87,898
have been deducted from the Share Premium reserve.
During the year the Company issued 15,600,000 new ordinary
shares on 5 June 2018 and 2,640,000 new ordinary shares on 25 July
2018 for 1 pence and 2.5 pence each respectively in settlement of
the exercise of warrants held by the Company brokers, raising gross
proceeds of $207,759 and $87,052 respectively.
The Other reserve balance arises from the issue of shares in the
Company as part of the Scheme of Arrangement undertaken in 2010,
which saw the shares in the then parent company BPC Limited
replaced with shares in Bahamas Petroleum Company plc (then BPC
plc), which became the new parent company of the Group.
12 Share based payments
Share based payments for the Company are the same as those for
the Group. For further details please see note 18 to the
consolidated financial statements.
13 Cash used in operations
2018 2017
Company Company
$ $
Loss before income tax (685,204) (1,588,656)
Adjustments for:
- Depreciation (note 6) 9,214 3,159
- Finance income (5,308) (3,507)
- Other income (1,111,721) -
- Foreign exchange loss/(gain) on operating
activities 29,437 (24,039)
- Share based payment (consolidated financial
statements note 18) 438,198 663,249
Changes in working capital:
- Other receivables 5,050 (18,523)
- Trade and other payables (830,372) 515,922
Cash used in operations (2,150,706) (452,395)
14 Related party transactions
During the year, goods and services totalling $689,041 (2017:
$1,948,417) were charged by the Company to BPC Limited, the 100%
indirectly owned subsidiary of the Company. See note 8 for details
of the amounts outstanding at the balance sheet date.
All other related party transactions of the Company are the same
as those for the Group. For further details see note 21 to the
consolidated financial statements.
15 Events after the balance sheet date
Events after the balance sheet date of the Company are the same
as those for the Group. For further
details see note 22 to the consolidated financial statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAKLLAFSNEFF
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