TIDMFRI
RNS Number : 8942W
Frontier Resources International
03 May 2016
For immediate release
3 May 2016
Frontier Resources International plc
('Frontier' or the 'Company')
Final results for the year ended 31 December 2015
The Board of Frontier (AIM:FRI), is pleased to provide
shareholders with the final results for the year ended 31 December
2015 (the 'Period').
Chairman's Statement
2015 was without doubt a very challenging year for the Company.
Volatility in global financial markets and the steep decline in oil
prices made it exceptionally difficult for the Company to progress
its farm-out discussions in respect of its then owned portfolio of
oil exploration assets in Africa and the Middle East, and
particularly Oman or secure new funding for its oil exploration
activities. By the end of the year, the Group had been unable to
conclude a farm-out. As there was no immediate prospect of a
material improvement in market conditions in the oil sector or
investor sentiment, the Board concluded that it should pursue
alternative options for the future funding and development of the
Group, including the disposal of the Group's oil exploration
projects and the investment in new projects outside of the oil
sector, which culminated in the substantial changes announced and
completed after the year end.
In February 2016, the Company completed a direct subscription
with existing and new investors which raised GBP1,425,000 before
expenses, to be used to provide working capital for the Company and
to support the investment in new projects.
To support this new strategic direction for the Company, there
were a number of proposed changes to the Board. On completion of
the subscription, I joined the Board as Chairman and Jack Keyes and
John O'Donovan both ceased to be directors.
As stated at the time of the subscription, the Board had
resolved not to provide any further capital to the Company's oil
exploration projects, the future of which the Board intended to
consider following completion of the subscription. Following
completion of that review and as announced on 3 March 2016, the
Company agreed the sale of the entire issued share capital of
Frontier Resources Oman Limited ("Frontier Oman") to Jack Keyes,
the former chief executive officer of the Company, which was
approved by Shareholders on 22 March 2016. The disposal of Frontier
Oman, which held the exploration and production sharing agreement
between the Government of the Sultanate of Oman and Frontier Oman
in respect of block 38, meant that the Company was able to make a
clean break from its activities in Oman and enabled the Board to
focus on new projects. Following completion of the disposal, the
Company now has no further liabilities either to Jack Keyes or to
Frontier Oman.
At the same time, given the disposal of the Group's activities
in Oman, and the proposed cessation of activities in Zambia and
Namibia as described further below, the Company also agreed the
sale of the entire issued share capital of Frontier Resources
International Inc ("FRII"), to Jack Keyes. FRII had historically
provided administrative and technical support for the Group's oil
exploration projects and had no licence interests.
The Board also resolved to cease the Group's remaining
activities in Namibia and Zambia, and commenced the implementation
of the necessary steps to wind-up, as soon as possible, Frontier
Resources Namibia Limited, the holder of the expired exploration
licence in Namibia and Frontier Zambia Resources Limited, the
holder of the exploration licence in Zambia.
Following these disposals, with effect from 23 March 2016, the
Company became an AIM Rule 15 cash shell, as a result of which it
must make an acquisition or acquisitions which constitute a reverse
takeover under AIM Rule 14 (including seeking re-admission as an
Investing Company (as defined under the AIM Rules)) within six
months, failing which the Exchange will suspend trading in the
Ordinary Shares pursuant to AIM Rule 40.
In conclusion, the past year has been a period of challenge and
substantial change for Frontier, but the Board believes that the
Company now has the funds and opportunity to re-build shareholder
value. The Board's strategy is to identify a suitable acquisition
or acquisitions in a new sector, which will satisfy the
requirements of AIM Rule 15, and we look forward to providing
shareholders with a further update in due course.
Adam Reynolds
Chairman
29 April 2016
Enquiries:
Frontier Resources
International Plc Tel: +44 (0) 7785
Adam Reynolds, Chairman 908158
Beaumont Cornish (Nomad)
Michael Cornish Tel: +44 (0)20 7628
Emily Staples 3396
Beaufort Securities
Limited (Broker) Tel: +44 (0)20 7382
Jon Belliss 8300
A copy of this announcement is available from the Company's
website www.friplc.com
STRATEGIC REVIEW
Financial performance
During the year, the oil industry experienced volatility in the
global financial markets and a steep decline in oil prices. With no
immediate prospect of a material improvement in market conditions
in the oil sector or investor sentiment, the board agreed during
the year to pursue alternative options for the future funding and
development of the Group, including the disposal of the Group's
existing oil exploration projects and the investment in new
projects outside of the oil sector. In accordance with AIM Rule 15,
the Company following the year end ceased to own, control or
conduct all, of its existing trading business, activities or assets
and has therefore become an AIM Rule 15 cash shell, pursuant to
which it must make an acquisition or acquisitions which constitutes
a reverse takeover under AIM Rule 14 within six months of the
disposal of the remaining operating subsidiaries on 22 March
2016.
The Group's loss for the year after taxation was $3,101,000
(2014: $1,225,000). The basic and diluted loss per share was 1.26
cents (2014: 0.92 cents). Losses for the year are due in the main
to exceptional costs, asset impairments, of $2,241,000. 2014 losses
were lower primarily due to the absence of exceptional costs.
The Group's net liabilities at the end of the year were $137,000
(2014: net assets $2,146,000). Net cash used in operations was
$494,000 (2014: $454,000) for the year. Cash invested in
exploration was $91,000 (2014: $836,000) for the year.
During 2015, the Company raised $470,000 ($1,141,000) by private
placement and subscriptions net of costs. Note 20 to the financial
statements provides further details.
At the year end the Group had cash balances of $26,000 (2014:
$165,000).
Operational performance
Following the year end the Company has sold or abandoned its
remaining oil explorations projects.
Oman
As at 31 December 2015, the subsidiary company, Frontier
Resources Oman Limited, was held for sale.
Namibia
Following the year end the Company abandoned its operation in
Namibia. The subsidiary company, Frontier Resources Nambia Limited,
ceased trading on 11 March 2016.
Zambia
In March 2015 the initial four-year exploration licence, which
was granted on 25 March 2011 and held by the Company's wholly-owned
subsidiary company, Frontier Resources Zambia Limited, expired.
Following the year end, Frontier Resources Zambia Limited
subsequently decided not to renew the licence for another three
years and ceased trading on 11 March 2016.
Principal risks and uncertainties
Principal risks and uncertainties are described below:
Going concern
The accounts have been prepared on a going concern basis. The
Group made a loss of $3,101,000 during the year ended 31 December
2015. At the year end the Group had cash balances of $26,000 and
net liabilities of $137,000.
As the directors believed no future funding was likely to be
available for the Group's early stage oil and gas exploration
projects, the directors agreed to pursue an alternative strategy
for the Company and either dispose (if possible) or abandon its oil
and gas projects. As at 31(st) December 2015, the Company impaired
all oil and gas exploration assets held.
Following the year end, the Company completed the disposal of
its Oman project and abandoned its Zambia and Namibia projects. As
a result, the Group no longer has any operating activities and has
become a cash shell under the AIM Rules. The Group has prepared
cash flow projections reflecting the requirements of the Group as a
cash shell. The current cash balances will provide sufficient
working capital to fund the Group's existing needs for the next 12
months prior to the Company making any further investments or
acquisitions. The operations of the Group are currently being
financed from funds which the Company raises from private and
public placing of its shares. As the Group has no operating
business, it is reliant on acquiring a new target business.
In order for the Company to make an acquisition or acquisitions
of a new target business which constitutes a reverse takeover as
required by the AIM Rules in order to maintain the admission of the
Company's shares to trading on AIM, the Company will need to raise
additional funds in due course. After making enquiries and
considering the uncertainties described above, the directors have a
reasonable expectation that such funding would be available and
that the Group would have sufficient cash to fund any planned new
strategic activities and to continue its operations for the
foreseeable future, and at least for one year from the date of
approval of these financial statements.
The financial statements have, therefore, been prepared on the
going concern basis. The financial statements do not contain any
adjustments relating to the recoverability and classification of
recorded assets that might be necessary should the Company and
Group not be able to continue as a going concern.
New projects
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The Company is seeking to acquire a target company for a reverse
takeover and is confident it will meet the requirements under AIM
rule 14 in the coming year.
Risks
The risk to the Company is in finding the right target business
to acquire. The Company is an AIM Rule 15 cash shell, pursuant to
which it must make an acquisition or acquisitions which constitute
a reverse takeover under AIM Rule 14 (including seeking
re-admission as an Investing Company (as defined under the AIM
Rules)) on or before 23 September 2016, failing which the Exchange
will suspend trading in the Ordinary Shares pursuant to AIM Rule
40.
Key performance indicators
At this stage in the Group's development, the key performance
indicators that the directors monitor on a regular basis are
management of liquid resources (cash flows and bank balances) and
also general administrative expenses, which are tightly
controlled.
The share price movement during the period 1 January 2015 to 31
December 2015 ranged from a high of 0.95p to a low of 0.08p. The
share price at close on 31 December 2015 was 0.1p.
Future outlook
As at the date of approval of the Financial Statements to 31
December 2015, in accordance with AIM Rule 15, the Company ceased
to own, control or conduct all, of its existing trading business,
activities or assets and has become an AIM Rule 15 cash shell,
pursuant to which it must make an acquisition or acquisitions which
constitutes a reverse takeover under AIM Rule 14 within six
months.
Events after the reporting period are described in Note 27 to
the financial statements.
On behalf of the Board
Barbara Spurrier
Chief Financial Officer
29 April 2016
Independent auditor's report to the members of Frontier
Resources International Plc
We have audited the Group and Parent Company financial
statements of Frontier Resources International plc for the year
ended 31 December 2015 (the "financial statements"), which comprise
the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Statements of Financial Position,
the Consolidated and Parent Company Statements of Changes in
Equity, the Consolidated and Parent Company Statements of Cash
Flows, together with the related notes. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union and, as regards the Parent Company
financial statements, as applied in accordance with the provisions
of the Companies Act 2006.
This report is made solely to the Company's members, as a body,
in accordance with part 3 of Chapter 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully under 'Statement of Directors'
Responsibilities' on page 11 the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view of the Group's affairs.
Our responsibility is to audit the financial statements in
accordance with relevant law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board's (APB) Ethical Standards for
auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at
www.frc.org.uk/auditscopeukprivate
Opinion on financial statements
In our opinion:
- the financial statements give a true and fair view of the
state of the Group's and the Parent Company's affairs as at 31
December 2015 and of the Group's loss for the year then ended;
- the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union;
- the Parent Company financial statements have been properly
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic and
Directors' Reports for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
- the Parent Company financial statements are not in agreement
with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
Daniel Huston (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
Chartered Accountants
Statutory Auditor
Quadrant House
4 Thomas More Square
London E1W 1YW
29 April 2016
Consolidated statement of comprehensive income
Year ended Year ended
Notes 31 December 31 December
2015 2014
$'000 $'000
---------------------------- ------- ------------ ------------
Continuing operations
Revenue - -
---------------------------- ------- ------------ ------------
Cost of sales - -
---------------------------- ------- ------------ ------------
Gross profit - -
Administrative expenses (207) (696)
Share-based payments 9 (32) (106)
Operating loss 6 (239) (802)
Finance costs 10 (7) (2)
---------------------------- ------- ------------ ------------
Loss before tax (246) (804)
Taxation 11 - -
Loss for the year
from continuing operations (246) (804)
Discontinued operations
Loss for the year
from discontinued
operations 5 (2,855) (421)
---------------------------- ------- ------------ ------------
Loss for the financial
year (3,101) (1,225)
---------------------------- ------- ------------ ------------
Exchange differences
arising on translation
of foreign operations (181) (52)
---------------------------- ------- ------------ ------------
Total comprehensive
loss for the financial
year (3,282) (1,277)
---------------------------- ------- ------------ ------------
Profit/(loss) per
share (cents)
Basic and diluted
earnings per share
From continuing operations 12 (0.1c) (0.61c)
From discontinued
operations 12 (1.16c) (0.32c)
12 (1.26c) (0.92c)
---------------------------- ------- ------------ ------------
The results reflected above relate to continuing and
discontinued activities.
The loss for the current and prior years and the total
comprehensive loss for the current and prior years are wholly
attributable to equity holders of the Parent Company, Frontier
Resources International plc.
Consolidated statement of financial position
Notes 31 December 31 December
2015 2014
$'000 $'000
----------------------------- ------- ------------- -------------
ASSETS
Non-current assets
Property, plant and
equipment 14 - 2
Exploration and evaluation
assets 14 - 3,012
- 3,014
----------------------------- ------- ------------- -------------
Current assets
Trade and other receivables 15 76 49
Cash and cash equivalents 26 165
----------------------------- ------- ------------- -------------
102 214
----------------------------- ------- ------------- -------------
Assets classified as
held for sale 5 699 -
TOTAL ASSETS 801 3,228
----------------------------- ------- ------------- -------------
EQUITY AND LIABILITIES
Equity attributable
to holders of the parent
Share capital 20 636 2,652
Deferred Shares 20 2,323 -
Share premium 20 5,741 5,081
Share-based payment
reserve 522 490
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Foreign exchange reserve (11) 170
Retained losses (9,348) (6,247)
----------------------------- ------- ------------- -------------
TOTAL EQUITY (137) 2,146
----------------------------- ------- ------------- -------------
Current liabilities
Trade and other payables 16 203 1,082
203 1,082
----------------------------- ------- ------------- -------------
Liabilities classified
as held for sale 5 735 -
TOTAL EQUITY AND LIABILITIES 801 3,228
----------------------------- ------- ------------- -------------
These financial statements were approved and authorised for
issue by the board of directors on 29 April 2016 and were signed on
its behalf by:
Barbara Spurrier
Chief Financial Officer
Company Registration Number: 06573154
Company statement of financial position
Notes 31 December 31 December
2015 2014
$'000 $'000
----------------------------- ------- ------------- -------------
ASSETS
Non-current assets
Investments in subsidiaries 13 - 2,724
----------------------------- ------- ------------- -------------
Current assets
Trade and other receivables 15 76 30
Cash and cash equivalents 26 152
----------------------------- ------- ------------- -------------
102 182
----------------------------- ------- ------------- -------------
TOTAL ASSETS 102 2,906
----------------------------- ------- ------------- -------------
EQUITY AND LIABILITIES
Equity attributable
to holders of the parent
Share capital 20 636 2,652
Deferred Shares 20 2,323 -
Share premium 20 5,741 5,081
Share-based payment
reserve 522 490
Retained losses (9,323) (6,079)
----------------------------- ------- ------------- -------------
(101) 2,144
----------------------------- ------- ------------- -------------
Current liabilities
Trade and other payables 16 203 762
----------------------------- ------- ------------- -------------
TOTAL EQUITY AND LIABILITIES 102 2,906
----------------------------- ------- ------------- -------------
These financial statements were approved and authorised for
issue by the board of directors on 29 April 2016 and were signed on
its behalf by:
Barbara Spurrier
Chief Financial Officer
Company Registration Number: 06573154
Consolidated statement of changes in equity
Share-based Foreign
Share Deferred Retained payment exchange
capital shares Share premium losses reserve reserve Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
As at 1
January 2014 1,731 - 4,861 (5,098) 460 222 2,176
Loss for the
year - - - (1,225) - - (1,225)
Other
comprehensive
loss - - - - - (52) (52)
Issue of share
capital 921 - 341 - - - 1,262
Issue costs
recognised in
equity - - (121) - - - (121)
Issue of
shares
options - - - - 106 - 106
Lapse of share
options - - - 76 (76) - -
--------------- ---------- -------------- --------------- -------------- -------------- -------------- --------
As at 31
December 2014 2,652 - 5,081 (6,247) 490 170 2,146
--------------- ---------- -------------- --------------- -------------- -------------- -------------- --------
Loss for the
year - - - (3,101) - - (3,101)
Other
comprehensive
loss - - - - - (181) (181)
Issue of share
capital 307 - 660 - - - 967
Transferred to
deferred
shares (2,323) 2,323 - - - - -
Issue of
shares
options - - - - 32 - 32
--------------- ---------- -------------- --------------- -------------- -------------- -------------- --------
As at 31
December 2015 636 2,323 5,741 (9,348) 522 (11) (137)
--------------- ---------- -------------- --------------- -------------- -------------- -------------- --------
The following describes the nature and purpose of each reserve
within owners' equity:
Share capital Amount subscribed for share capital at nominal
value
Share premium Amount subscribed for share capital in excess of
nominal value
Retained losses Cumulative net losses recognised in the
financial statements
Share-based payment reserve Amounts recognised for the fair
value of share options and warrants granted
Foreign exchange reserve Exchange differences on translating foreign operations
Company statement of changes in equity
Share Share-based
capital Deferred shares Share premium Retained losses payment reserve Total
$'000 $'000 $'000 $'000 $'000 $'000
As at 1 January
2014 1,731 - 4,861 (4,728) 460 2,324
Loss for the year - - - (1,427) - (1,427)
Issue of share
capital 921 - 341 - - 1,262
Issue costs
recognised in
equity - - (121) - - (121)
Issue of share
options - - - - 106 106
Lapse of share
options - - - 76 (76) -
------------------- ---------- ----------------- --------------- ---------------- ------------------- --------
As at 31 December
2014 2,652 - 5,081 (6,079) 490 2,144
------------------- ---------- ----------------- --------------- ---------------- ------------------- --------
Loss for the year - - - (3,244) - (3,244)
Issue of share
capital 307 - 660 - - 967
Transferred to
deferred shares (2,323) 2,323 - - - -
Issue of share
options - - - - 32 32
------------------- ---------- ----------------- --------------- ---------------- ------------------- --------
As at 31 December
2015 636 2,323 5,741 (9,323) 522 (101)
------------------- ---------- ----------------- --------------- ---------------- ------------------- --------
The following describes the nature and purpose of each reserve
within owners' equity:
Share capital Amount subscribed for share capital at nominal
value
Share premium Amount subscribed for share capital in excess of
nominal value
Retained losses Cumulative net losses recognised in the
financial statements
Share-based payment reserve Amounts recognised for the fair
value of share options and warrants granted
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Consolidated statement of cash flows
Year ended Year ended
31 December 31 December
2015 2014
Notes $'000 $'000
Net cash used in operations 17 (494) (454)
------------------------------ ----- ------------- ------------
Cash flows from investing
activities
Expenditures for exploration
and evaluation 14 (91) (836)
Net cash used in investing
activities (91) (836)
------------------------------ ----- ------------- ------------
Cash flows from financing
activities
Proceeds from issue
of share capital (net
of issue costs) 470 1,141
Finance costs 10 (7) (2)
Net cash from financing
activities 463 1,139
------------------------------ ----- ------------- ------------
Net decrease in cash
and cash equivalents (122) (151)
Cash and cash equivalents
beginning of year 165 366
Effect of foreign
exchange rate changes (17) (50)
Cash and cash equivalents
at end of year 26 165
------------------------------ ----- ------------- ------------
Company statement of cash flows
Year ended Year ended
Notes 31 December 31 December
2015 2014
$'000 $'000
Net cash used in operating
activities 18 52 (509)
----------------------------- ------- ------------- ------------
Cash flows from investing
activities
Funds paid to subsidiary (641) (803)
----------------------------- ------- ------------- ------------
Net cash used in investing
activities (641) (803)
----------------------------- ------- ------------- ------------
Cash flows from financing
activities
Proceeds from issue
of share capital (net
of issue costs) 470 1,141
Finance cost (7) -
Net cash from financing
activities 463 1,141
----------------------------- ------- ------------- ------------
Net decrease in cash
and cash equivalents (126) (171)
Cash and cash equivalents
beginning of year 152 323
----------------------------- ------- ------------- ------------
Cash and cash equivalents
at end of year 26 152
----------------------------- ------- ------------- ------------
Notes to the financial statements
1 General information
Frontier Resources International Plc is incorporated in the
United Kingdom. The address of the registered office is given in
the officers and advisors section. The nature of the Company's
operations and its principal activities are set out in the
Directors' report.
The functional currency of the Company is Sterling (GBP). The
presentational currency of the Company is the US Dollar ($) because
that is the main currency of the industry in which the Group
operates (being the oil and gas industry).
2 Adoption of new and revised International Financial Reporting Standards
The following standards, amendments and interpretations are not
yet effective and have not been early adopted by the Group. The
adoption of these standards, amendments and interpretations is not
expected to have a material impact on the Group's financial
statements in the periods of initial application.
Standard Description Effective
date
IFRS11(Amendment Acquisition of interests 1 January
2014) in Joint Operations 2016
IFRS 9 Financial Instruments 1 January
- classification and measurement 2018
of financial assets
IFRS 15 Revenue from contracts 1 January
with customers 2018
3 Significant accounting policies
Basis of preparation
These financial statements of the Group and Company are prepared
on a going concern basis, under the historical cost convention and
in accordance with International Financial Reporting Standards
(IFRS) and IFRIC interpretations issued by the International
Accounting Standards Board (IASB) and adopted by the European
Union, including IFRS 6 'Exploration for and Evaluation of Mineral
Resources' and in accordance with the Companies Act 2006. The
Parent Company's financial statements have also been prepared in
accordance with IFRS as adopted by the European Union and the
Companies Act 2006.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
Basis of consolidation
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Company and its subsidiaries ("the
Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirees's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
Parent Company income statement
The Company has taken advantage of Section 408 of the Companies
Act 2006 in not presenting its own income statement. The Company's
loss for the year was $3,244,000 (2014: $1,548,000) and is included
within the consolidated statement of comprehensive income.
Going concern
The accounts have been prepared on a going concern basis. The
Group made a loss of $3,101,000 during the year ended 31 December
2015 and continues to be loss making. At the year end the Group had
cash balances of $26,000 and net liabilities of $137,000.
As the directors believed no future funding was likely to be
available for the Group's early stage oil and gas exploration
projects, the directors agreed to pursue an alternative strategy
for the Company and either dispose (if possible) or abandon its oil
and gas projects. As at 31 December 2015, the Company impaired all
oil and gas exploration assets held.
Following the year end, the Company completed the disposal of
its Oman project and abandoned its Zambia and Namibia projects. As
a result, the Group no longer has any operating activities and has
become a cash shell under the AIM Rules. The Group has prepared
cash flow projections reflecting the requirements of the Group as a
cash shell. The current cash balances will provide sufficient
working capital to fund the Group's existing needs for the next 12
months prior to the Company making any further investments or
acquisitions. The operations of the Group are currently being
financed from funds which the Company raises from private and
public placing of its shares. As the Group has no operating
business, it is reliant on acquiring a new target business.
In order for the Company to make an acquisition or acquisitions
of a new target business which constitutes a reverse takeover as
required by the AIM Rules in order to maintain the admission of the
Company's shares to trading on AIM, the Company will need to raise
additional funds in due course. After making enquiries and
considering the uncertainties described above, the directors have a
reasonable expectation that such funding would be available and
that the Group would have sufficient cash to fund any planned new
strategic activities and to continue its operations for the
foreseeable future, and at least for one year from the date of
approval of these financial statements.
The financial statements have, therefore, been prepared on the
going concern basis. The financial statements do not contain any
adjustments relating to the recoverability and classification of
recorded assets that might be necessary should the Company and
Group not be able to continue as a going concern.
Investments in subsidiaries
In its separate financial statements, the Company's investment
in its subsidiaries has been fully impaired.
Taxation
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Income tax expense represents the sum of the current tax and
deferred tax charge for the year. The tax currently payable is
based on taxable profit for the year. Taxable profit differs from
profit as reported in the statement of comprehensive income because
it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are
never taxable or deductible. The Group's and Company's liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the year end.
Deferred income taxes are provided in full, using the liability
method, for all temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
financial statements. Deferred income taxes are determined using
tax rates that have been enacted or substantially enacted and are
expected to apply when the related deferred income tax asset is
realised or the related deferred income tax liability is
settled.
The principal temporary differences arise from depreciation or
amortisation charged on assets and tax losses carried forward.
Deferred tax assets relating to the carry forward of unused tax
losses are recognised to the extent that it is probable that future
taxable profit will be available against which the unused tax
losses can be utilised.
Foreign currencies
Functional and presentational currency
Items included in the financial statements are measured using
the currency of the primary economic environment in which the
Company operates ("the functional currency") which is considered by
the directors to be the Pounds Sterling (GBP). The financial
statements have been presented in US Dollars. The effective
exchange rate at 31 December 2015 was GBP1 =US$1.48 (2014: GBP1 =
US$1.55).
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such 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.
Transactions in the accounts of individual Group companies are
recorded at the rate of exchange ruling on the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rates ruling at the year end. All
differences are taken to the statement of comprehensive income.
Leases
The determination of whether an arrangement is, or contains, a
lease is based on the substance of the arrangement, which involves
assessing whether the fulfilment of the arrangement depends on the
use of a specific asset or assets or the arrangement conveys a
right to use the asset.
The classification of leases as financing or operating leases
requires the Company to determine, based on an evaluation of the
terms and conditions, whether it retains or acquires the
significant risks and rewards or ownership of these assets and
accordingly whether the lease requires an asset and liability to be
recognized on the balance sheet.
The Company leases assets, all which have been determined to be
operating leases. Operating lease payments are recognized as an
expense in the income statement on a straight-line basis over the
lease term. Financing charges are reflected in the income
statement.
Rent paid on operating leases is charged to the statement of
comprehensive income on a straight line basis over the term of the
lease.
Borrowing costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset form
part of the cost of that asset. All other borrowing costs are
recognised in profit or loss in the period in which they are
incurred.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as 'loans and receivables'. Loans and receivables
are measured at amortised cost using the effective interest method,
less any impairment.
Cash and cash equivalents
Cash and cash equivalents comprise balances on bank accounts,
cash in transit and cash floats held in the business. Interest
bearing bank loans are recorded at the proceeds received, net of
issue costs. Finance charges are accounted for on an accruals basis
and charged to the statement of comprehensive income when
payable.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at
each year end. Financial assets are impaired where there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been affected
that can be reliably estimated.
Payables, financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Equity instruments
An equity instrument is any instrument with a residual interest
in the assets of the Company after deducting all of its
liabilities. Equity instruments (ordinary shares) are recorded at
the proceeds received, net of direct issue costs.
Payables
Payables are recognised at fair values and classified as current
liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the
statement of financial position date.
Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs and are
subsequently measured at amortised cost using the effective
interest method.
De-recognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Property, plant and equipment
Equipment and proven oil and gas assets are stated at cost less
accumulated depreciation and accumulated impairment. Equipment is
depreciated on a straight line basis over its expected useful life.
The expected useful lives of equipment are reviewed on an annual
basis and, if necessary, changes in useful lives are accounted for
prospectively.
Proven oil and gas assets are accounted for using the successful
efforts method. For evaluated properties with economic values
exceeding the exploration and development costs incurred after the
grant of the licence, these costs, which may include geological and
geophysical costs, costs of drilling exploration and development
wells, costs of field production facilities, including
commissioning and infrastructure costs, are capitalised. These
expenditures are combined into asset groups reflecting the
anticipated useful lives of individual assets and subsequently are
depreciated over the expected economic lives of those asset groups.
The expenditure within the asset group with a useful life equal to
the producing life of the field is depleted on a unit-of-production
basis.
Impairment reviews of property, plant and equipment
The carrying amounts of the Group's and Company's assets are
reviewed at each year end and, if there is any indication that an
asset may be impaired, its recoverable amount is estimated. The
recoverable amount is the higher of its net selling price and its
value in use for example, the discounted future cash flows from the
estimated recoverable oil and gas reserves for proven oil and gas
assets. Any impairment loss arising from the review is charged to
the statement of comprehensive income under costs of sale whenever
the carrying amount of the asset exceeds its recoverable
amount.
A previously recognised impaired loss is reversed only if there
has been a change in the estimates used to determine the asset's
recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased
to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the consolidated
statement of comprehensive income and the depreciation charge
adjusted prospectively.
Exploration and evaluation assets
Costs associated with exploration and evaluation are capitalised
on a project-by-project basis, where a project may be a collection
of geographically and geologically similar licenses. Costs
capitalised include appropriate technical and directly attributable
administrative expenses but not general overheads. Costs
capitalised are reviewed at each reporting date to confirm that
there is no indication of impairment and that drilling is still
underway or is planned. If no future exploration or development
activity is planned in the licence area the exploration and
evaluation assets are impaired.
Impairment reviews of exploration and evaluation assets
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The capitalised expenditures for each project are reviewed at
each reporting date to confirm that there is no indication that the
carrying amount exceeds the recoverable amount. This review
included confirming that exploration drilling is still underway or
firmly planned or that it has been determined, or work is under way
to determine, that the discovery is economically viable based on a
range of technical and commercial considerations and sufficient
progress is being made on establishing development plans and
timing. If no future activity is planned, the remaining balance of
capitalised expenditures for the project is written off as
impairment in the consolidated statement of comprehensive income.
When production commences the accumulated costs for the project are
transferred from intangible exploration and evaluation assets to
Proven oil and gas assets in property, plant & equipment.
Assets and disposal groups held for sale
Assets and disposal groups are classified as held for sale if
their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the asset (or
disposal groups) is available for immediate sale in its present
condition.
Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one
year from the date of classification.
Assets and disposal groups classified as held for sale are
measured at the lower of the assets' previous carrying amount and
fair value less costs to sell.
Ordinary shares
Ordinary shares are classified as equity. Costs directly
attributable to the increase of new shares or options are shown in
equity as a deduction from the proceeds.
Share-based payments
The Company made share-based payments to certain directors and
advisers by way of issue of share options. The fair value of these
payments is calculated either using the Black Scholes option
pricing model or by reference to the fair value of any fees or
remuneration settled by way of granting of options. The expense is
recognised on a straight line basis over the period from the date
of award to the date of vesting, based on the Company's best
estimate of shares that will eventually vest.
Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with
International Financial Reporting Standards requires the use of
accounting judgements, estimates and assumptions that affect the
reported amounts of assets and liabilities and the reported amounts
of income and expenses during the reporting period.
There are no matters requiring significant judgement (apart from
those involving estimations, which are dealt with below) other than
the application of the going concern basis as disclosed
separately.
Although estimates are based on management's best knowledge of
current events and actions, the resulting accounting estimates
will, by definition, seldom equal the related actual results. The
estimates and assumptions that have a risk of causing material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Carrying value of property, plant and equipment (including oil
and gas assets)
Depletion and depreciation for oil assets is calculated on a
unit-of-production basis, using the ratio of oil production in the
period to the estimated quantities of proved and probable reserves
at the end of the period plus production in the period. Oil and gas
assets are tested periodically for impairment to determine whether
the net book value of capitalised costs relating to the cash
generating unit exceed the associated estimated future discounted
cash flows of the related commercial oil and gas reserves. If an
impairment is identified, the depletion is charged through the
statement of comprehensive income in the period incurred.
Carrying value of investment in subsidiaries
In the separate financial statements of the Company, the
investment in subsidiaries is periodically reviewed for impairment
by management. These reviews require the use of judgements and
estimates of whether there are any indications that the carrying
values are not recoverable.
4 Operating segments
In the opinion of the directors, the operations of the Group
during the year to December 2014, comprise one operating segment,
being oil and gas exploration. The Group has exploration and
evaluation licenses in Oman, Namibia and Zambia. During the year to
December 2015 the activity of this operating segment has been
discontinued (see note 5 for more details). These financial
statements reflect all the activities of this single operating
segment. Segments are determined by reference to the Group's
internal organisation and reporting to the directors which bases
its structure on products and geographical areas.
Group exploration assets for continuing and discontinued
operations are distributed as follows:
31 December 31 December
2015 2014
$'000 $'000
------------------------ ----------- -----------
USA - 2
Rest of world - 3,012
------------------------- ----------- -----------
Continuing operations - 3,014
------------------------- ----------- -----------
USA - -
Rest of world 690 -
------------------------- ----------- -----------
Discontinued operations 690 -
------------------------- ----------- -----------
5 Discontinued operations and held for sale
During the year the Directors have committed to dispose or has
suspended its oil and exploration operations in Frontier Inc,
Frontier Oman, Frontier Namibia and Frontier Zambia.
1. Frontier Inc and Frontier Oman - its assets and liabilities
have been classified as held for sale under IFRS 5 and its results
for the year are classified as discontinued operations.
2. Frontier Namibia and Frontier Zambia operations were
suspended during the year due to lack of funding. However, both did
not meet the criteria to be classified as held for sale under IFRS
5 but its results for the year are classified as discontinued
operations.
The results for these discontinued operations below excluded any
intercompany balances written off or forgiven in the individual
entities. These were eliminated on consolidation of the group
results.
Year Year ended
ended
31 December 31 December
2015 2014
$'000 $'000
Administrative expenses 1,030 421
Exceptional item- 1,825 -
assets impairment
------------ ------------
Loss before and after
tax 2,855 421
------------ ------------
The major classes of assets and liabilities of these
discontinued operations classified as held for sale in the
consolidated statement of financial position at 31 December 2015
are as follows:
2015
$'000
Property, plant and
equipment 2
Exploration and evaluation
assets 690
Cash and cash equivalents 2
Trade and other receivables 5
------
Assets classified as
held for sale 699
------
Trade and other payables 735
------
Liabilities classified
as held for sale 735
------
The consolidated statement of cash flows includes the following
amounts relating to discontinued operations for the year ended 31
December 2015:
2015
$'000
Cash used in operating
activities (966)
Cash used in investing
activities (91)
(1,057)
--------
6 Operating loss
The Group's operating loss has been arrived at after
charging:
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
------------------------------------------------ ------------- ------------
Operating lease rentals 53 39
Audit fees 18 24
Fees payable to Company's
auditor for other services:
* Tax and Corporate finance services 9 15
7 Employees
The average number of employees (including directors) in the
Group and their remuneration was as follows:
Year ended Year ended
31 December 31 December
2015 2014
Number of employees No 6 6
-------------------------------- ------------- ------------
Wages, salaries and fees $'000 122 650
-------------------------------- ------------- ------------
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Directors' remuneration comprises:
Year ended Year ended 31
31 December December 2014
2015
$'000 $'000
------------------------------- ------------- --------------
Executive director salaries(1) 44 316
Non-executive directors'
fees 32 86
Former non-executive
directors fee 12 -
Social security contributions 10 16
--------------------------------- ------------- --------------
Wages, salaries and fees 98 418
Directors' share-based
payments 22 68
Benefits in kind 20 24
--------------------------------- ------------- --------------
Total Directors' remuneration 140 510
--------------------------------- ------------- --------------
(1) The amount disclosed relates to salaries paid during the
year 2015 and excludes reversal of unpaid accrued salaries.
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group. These are considered to be the directors
of the Company and so key management remuneration is as disclosed
above.
The Group does not operate a pension plan for directors or
employees.
8 Directors' share options
None of the share option grants have ever been exercised.
Details of outstanding share options as at 31 December 2015 are as
follows:
As at 1 As at 31 Exercise Earliest
January Granted/ December Price Date of Exercise
2015 (Lapsed) Exerc-ised 2015 (pence) Grant Date Expiry Date
------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
M J Keyes 250,000 - - 250,000 5.5 14/10/10 14/10/11 14/10/20
M J Keyes 250,000 - - 250,000 5.5 14/10/10 14/10/12 14/10/20
M J Keyes 250,000 - - 250,000 5.5 14/10/10 14/10/13 14/10/20
J O'Donovan 1,000,000 - - 1,000,000 5.5 14/10/10 14/10/11 14/10/20
J O'Donovan 1,000,000 - - 1,000,000 5.5 14/10/10 14/10/12 14/10/20
J O'Donovan 1,000,000 - - 1,000,000 5.5 14/10/10 14/10/13 14/10/20
B Spurrier 250,000 - - 250,000 5.5 15/10/10 15/10/12 15/10/20
B Spurrier 583,333 - - 583,333 6.0 05/7/13 05/7/14 05/07/23
B Spurrier 583,333 - - 583,333 6.0 05/7/13 05/7/15 05/07/23
B Spurrier 583,334 - - 583,334 6.0 05/7/13 05/7/16 05/07/23
9 Share options and share-based payments
The Company grants share options at its discretion to directors,
management and advisors. Share options are granted with vesting
periods of between one and three years from the date of grant.
Should the options remain unexercised after a period of ten years
from the date of grant, the options will expire. Options are
exercisable at a price equal to the Company's quoted market price
on the date of grant.
Details for the share options granted, exercised, lapsed and
outstanding at the year-end are as follows:
As at 31 December As at 31 December
2015 2014
Number
of
share * WAEP Number of * WAEP
options (pence) share options (pence)
------------ --------- --------------- ---------
Outstanding at beginning
of year 8,250,000 5.7 11,169,230 5.8
Granted during the
year - - - -
Forfeited/lapsed
during the year (500,000) 6.0 (2,919,230) 6.2
Exercised during
the year - - - -
-------------------------- ------------ --------- --------------- ---------
Outstanding at end
of the year 7,750,000 5.7 8,250,000 5.7
-------------------------- ------------ --------- --------------- ---------
Exercisable at end
of the year 6,966,666 5.6 5,000,000 5.5
-------------------------- ------------ --------- --------------- ---------
* WEAP is Weighted Average Exercise Price
Fair value of share options
Options are priced using an option pricing model including the
quoted market value of the share price and assumptions for share
price volatility and dividends. Both remained constant from the
date of listing in January 2009 to 31 December 2015. Expected
volatility for grants is based on the Frontier Resources
International plc share price over the 12 month period to date of
grant.
No options nor warrants were granted in 2015
It is assumed that no options will be exercised.
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
-------------------------------- ------ ------------ ------------
Grant date share price (pence) Pence - -
-------------------------------- ------ ------------ ------------
Exercise price (pence) Pence - -
-------------------------------- ------ ------------ ------------
Expected volatility - -
-------------------------------- ------ ------------ ------------
Option life - -
-------------------------------- ------ ------------ ------------
Charge for share based payments $'000 - -
-------------------------------- ------ ------------ ------------
Weighted average fair value Pence - -
of share options grant
-------------------------------- ------ ------------ ------------
Quoted share price at time Pence - -
of grant
-------------------------------- ------ ------------ ------------
Cents - -
-------------------------------- ------ ------------ ------------
Quoted share price - high Pence 0.95 4.000
-------------------------------- ------ ------------ ------------
Quoted share price - low Pence 0.08 0.750
-------------------------------- ------ ------------ ------------
Unexercised warrants
Issue Exercise Number Exercisable Expiry
date price date
------------ --------- ---------------- ---------------- -----------
Any time before
05/07/2013 6.0p 1,100,555 expiry 05/07/2018
Any time before
05/07/2013 6.0p 1,440,000 expiry 05/07/2018
Any time before
05/07/2013 6.0p 416,666 expiry 05/07/2016
Any time before
13/11/2014 1.0p 12,500,000 expiry 12/11/2018
Neil Herbert's Self Invested Pension Plan was issued share
warrants in November 2014, on a one for one basis for the
subscription of ordinary shares.
10 Finance costs
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
---------------- ------------ ------------
Other interests 7 2
----------------- ------------ ------------
11 Taxation
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
------------------------------ ------------- ------------
Corporation tax
Current corporation tax - -
------------------------------ ------------- ------------
Deferred tax
Deferred tax - -
------------------------------ ------------- ------------
Corporation tax is calculated
at the following rates 20% 21%
------------------------------- ------------- ------------
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Corporation tax is calculated at above stated rates on the
estimated taxable profit for the year. The Group's effective tax
rate differs from the theoretical amount that would arise using the
UK domestic corporation tax rate applicable to losses of the
consolidated companies as follows:
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
--------------------------------- ------------- -------------
Loss before tax on ordinary
activities (3,101) (1,225)
Corporation tax calculated
at rate applicable for year (620) (257)
Effect of overseas and other - -
taxes at different rates
Expenses not deductible for
tax purposes 483 75
Effect of unused tax losses
carried forward 137 182
Effect of deferred tax movements - -
--------------------------------- ------------- -------------
Taxation credit - -
--------------------------------- ------------- -------------
Effective percentage tax rate
for year 0% 0%
---------------------------------- ------------- -------------
The Group has incurred tax losses for the year and therefore a
corporation tax charge does not arise.
The Group has unrelieved tax losses that that have not been
recognised as a deferred tax as the recovery of this benefit is
dependent on the future profitability of Group entities, the timing
of which cannot be reasonably foreseen (see note 19).
12 Loss per share
The basic loss per share has been calculated using the loss for
the year and the weighted average number of ordinary shares
outstanding during the year, as follows:
Year ended Year ended
Basic 31 December
2015 31 December
2014
Loss for the year - continuing
operations ($'000) (246) (804)
Loss for the year - discontinued
operations ($'000) (2,855) (421)
------------------------------------- ------------- ------------
Loss for the year ($'000) (3,101) (1,225)
------------------------------------- ------------- ------------
Weighted average number of
ordinary shares 246,168,507 132,468,176
------------------------------------- ------------- ------------
Basic loss per share - continuing
operations (cents) (0.1c)c (0.61c)
Basic loss per share - discontinued
operations (cents) (1.16c) (0.32c)
------------------------------------- ------------- ------------
Basic loss per share (cents) (1.26c) (0.92c)
------------------------------------- ------------- ------------
Weighted average number of
ordinary shares allowing for
the exercise of options 361,999,056 137,518,640
------------------------------------- ------------- ------------
The Company has not issued share options in 2015. The diluted
loss per share has been kept the same as the basic loss per share
as the conversion of share options decreases the basic loss per
share, thus being anti-dilutive.
13 Investments in subsidiary undertakings
During 2014 and up to the 2015 year end, the Company operated
each of its regional oil and gas assets through special purpose
100% owned subsidiary undertakings that are funded by equity and
intercompany funding arrangements with the Company. These
subsidiaries have since the 2015 year end, been either sold or
dissolved.
The principal activity of each subsidiary was that of oil and
gas exploration. Frontier Resources International Inc, following
the disposal of its oil and gas assets in 2012, provides technical
and management services.
The subsidiaries are as follows:
Equity Place of Date & country
interest business of incorporation
Frontier Resources 100%
International 24 Feb
Inc. U.S.A. 1989 U.S.A.
Frontier Resources 100%
Oman Ltd Oman 9 May 2011 U.K.
Frontier Resources 100% 2 August
Namibia Ltd Namibia 2011 U.K.
Frontier Resources 100% 7 November
Zambia Ltd Zambia 2011 U.K.
The Company's investments in, and loans to, subsidiary
undertakings is as follows:
Company
31 December 31 December
2015 2014
Cost
At 1 January 4,887 4,084
Amounts advanced to subsidiaries - 803
---------------------------------- ------------- -------------
At 31 December 4,887 4,887
---------------------------------- ------------- -------------
Provisions
At 1 January (2,163) (1,820)
Impairment (see below) (2,724) (343)
At 31 December (4,887) (2,163)
---------------------------------- ------------- -------------
Carrying value - 2,724
---------------------------------- ------------- -------------
The directors have assessed the carrying value of the Company's
investment in its subsidiaries and have impaired its investments in
the accounts of the Company in 2015 by $2,724,000 (2014: $343,000).
The amounts due from the subsidiaries have no fixed repayment terms
but are repaying in more than one year.
14 Non-current assets
a) Property, plant and equipment (PPE) and Exploration and evaluation assets (E&EA)
Group PPE E&EA
$'000 $'000
------------------------------ ------- -------
Cost
At 1 January 2014 9 2,176
Additions - 836
------------------------------ ------- -------
At 31 December 2014 9 3,012
Additions - 91
Reclassified as held for sale (9) (1,702)
Foreign exchange movements - (172)
------------------------------ ------- -------
At 31 December 2015 - 1,229
------------------------------ ------- -------
Depreciation
At 1 January 2014 (6) -
Charge for the year (1) -
------------------------------ ------- -------
At 31 December 2014 (7) -
Impairment losses - (2,241)
Reclassified as held for sale 7 1,012
------------------------------ ------- -------
At 31 December 2015 - (1,229)
------------------------------ ------- -------
Carrying value
At 31 December 2014 2 3,012
------------------------------ ------- -------
At 31 December 2015 - -
------------------------------ ------- -------
The amount of capitalised exploration and evaluation expenditure
at 31 December 2015 was $nil (2014: $3,012,000) of which $nil
(2014: $1,810,000) related to the Group's Oman licence, $nil (2014:
$972,000) related to the Group's Namibian licence and $nil (2014:
$230,000) related to the Group's Zambian licence. The capitalised
EEA relating to Oman licence has been reclassified as held for
sale.
The directors have assessed the value of those E&EA assets,
and in their opinion, based on a review of the expiry dates of
licences, expected available funds and the intention not to
continue exploration and evaluation, apart from the E&EA assets
held for sale for Oman, the remaining E&EA assets relating to
Zambia and Namibia were fully impaired.
b) Provision for decommissioning
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
-------------- ------------ ------------
At 31 December - -
-------------- ------------ ------------
The provision for decommissioning represents the present value
of the asset retirement obligations associated with the Group's
future abandonment of oil and gas properties. The provision for
decommissioning is estimated after taking into account of
inflation, years to abandonment and an appropriate discount rate.
The timing of the economic outflows relating to this provision is
uncertain but is not due within one year of the year end.
Actual decommissioning costs will ultimately depend upon future
market prices for the decommissioning work required, which will
reflect market conditions at the relevant time. Furthermore, the
timing of decommissioning is likely to depend on when the fields
cease to produce at economically viable rates. This in turn will
depend upon future oil and gas prices, which are inherently
uncertain. The actual amounts paid for decommissioning may
ultimately vary significantly from the provision at the year ends
requiring potentially material adjustments to the carrying value of
the obligations.
The directors have evaluated the operations to date and
concluded a provision is currently not necessary.
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15 Trade and other receivables
Group Company
31 December 31 31 31
2015 December December December
2014 2015 2014
$'000 $'000 $'000 $'000
------------------ ----------- ----------- ----------- -----------
Prepayments 18 39 18 23
Other receivables 58 10 58 7
------------------ ----------- ----------- ----------- -----------
76 49 76 30
------------------ ----------- ----------- ----------- -----------
All amounts are due within three months. No amounts are past
due.
16 Trade and other payables
Group Company
31 December 31 December 31 December 31 December
2015 2014 2015 2014
$'000 $'000 $'000 $'000
---------------------- ------------- ------------- ------------- -------------
Trade payables 73 88 73 83
Director's current
account - 214 - 144
Accruals 130 780 130 535
203 1,082 203 762
---------------------- ------------- ------------- ------------- -------------
Average credit period
taken on purchases
in days 53 82 53 82
---------------------- ------------- ------------- ------------- -------------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs and are payable
within 3 months.
The directors' voluntarily agreed for their outstanding current
account to be written off in full as at the 31 December 2015.
Also included in accruals at 31 December 2015 is $nil (2014:
$32,000) payable to Jack Keyes for the private health care benefit
provided by the Company.
The Directors consider that the carrying amount of trade
payables approximates their fair value.
17 Notes to the consolidated statement of cash flows
Year ended Year ended
31 December 31 December
Group 2015 2014
Cash from operating activities $'000 $'000
-------------------------------- ------------ ------------
Loss for the financial
year (3,101) (1,225)
Adjustments for:
Impairment of assets 2,241 -
Depreciation of plant
and equipment 1 1
Finance costs 7 -
(Increase)/ (decrease
in trade and other receivables (27) 259
{Decrease)/increase in
trade and other payables (144) 405
Expenses settled through
issue of shares 497 -
Share-based payments 32 106
Net cash used in operating
activities (494) (454)
------------------------------------ ------------ ------------
18 Notes to the company statement of cash flows
Year ended Year ended
31 December 31 December
Company 2015 2014
Cash from operating activities $'000 $'000
------------------------------- ------------ ------------
Loss for the financial
year (3,244) (1,427)
Adjustments for:
Impairment of Investment
in subsidiary (note 13) 2,724 343
Write off of intercompany
balances 641
(Increase)/decrease in
trade and other receivables (46) 262
(Decrease)/increase in
trade and other payables (559) 207
Expenses settled through
issue of shares 497
Share-based payments 32 106
Finance Cost 7 -
Net cash used in operating
activities 52 (509)
----------------------------------- ------------ ------------
19 Deferred tax
The Group has unrelieved tax losses. The potential benefit of
these taxation losses calculated at the rates of tax prevailing in
the countries in which the losses were incurred has not been
recognised as a deferred tax at the year-end dates as the recovery
of this benefit is dependent on the future profitability of Group
entities.
Group Company
31 December 31 December 31 December 31 December
2015 2014 2015 2014
$'000 $'000 $'000 $'000
---------------------- ------------- ------------- ------------- -------------
Cumulative tax losses
- Rest of World 5,200 4,104 3,119 2,493
- USA - 483 - -
---------------------- ------------- ------------- ------------- -------------
Unrecognised deferred
tax asset related
to the losses
- Rest of World 936 821 561 498
- USA - 160 - -
---------------------- ------------- ------------- ------------- -------------
20 Share capital
Issued share capital
The issued share capital was as follows:
Ordinary Shares Share Deferred Deferred Share
Capital shares shares Premium
-------------------------------------------------------- --------------- -------- ----------- -------- --------
Company Number $'000 Number $'000 $'000
-------------------------------------------------------- --------------- -------- ----------- -------- --------
At 1 January 2014 110,055,505 1,731 - - 4,861
Issue of share capital during the year 55,375,000 921 - - 220
At 31 December 2014 165,430,505 2,652 - - 5,081
-------------------------------------------------------- --------------- -------- ----------- -------- --------
Issue of share capital during the year 196,568,551 307 - - 660
Subdivision of existing ordinary shares into 1 ordinary
share of 0.1p plus one deferred share 165,430,505 - - - -
Transferred to Deferred Shares (165,430,505) (2,323) 165,430,505 2,323 -
At 31 December 2015 361,999,056 636 165,430,505 2,323 5,741
-------------------------------------------------------- --------------- -------- ----------- -------- --------
Details of the Group's share options in issue are shown in note
8.
During the year to 31 December 2015 the following share
transactions are reflected in the table above:
-- An issue of 175,040,030 shares as fully paid up in July 2015
by placing at a price of 0.35p per share. Of this issue, 74,065,031
shares were in lieu of fees, services and settlement of AGR Energy
loan.
-- An issue of 21,528,521 shares as fully paid up in November
2015 at a price of 0.165p per share t
-- On 30 June 2015, 165,430, 505 shares of 1p each were
subdivided into 165,430,505 new ordinary of 0.1p and 165,430, 505
shares of 0.9p each were deferred, as part of the Company's capital
reorganisation of its shares.
The new ordinary shares have the same rights as those currently
accruing to the existing ordinary shares under the existing
articles of association, including those relating to voting and
entitlement to dividends. These shares carry no right to fixed
income.
21 Control
The Company is under the control of its shareholders and not any
one party.
22 Related party transactions
Intercompany transactions
Balances between the Company and its subsidiaries, which are a
related party, were written off at year end. The amounts written
off have been eliminated on consolidation.
Compensation and other payments to key management personnel
(including directors)
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The remuneration of the directors, who were the key management
personnel of the Group in 2015, is set out below in aggregate for
each of the categories specified in IAS 24, 'Related Party
Disclosures'.
Year ended Year ended
31 December 31 December
2015 2014
$'000 $'000
------------------------------- ------------- -------------
Short term employment benefits 76 402
Share-based payments 22 68
-------------------------------- ------------- -------------
Consultancy fees - -
Service fees 145 155
-------------------------------- ------------- -------------
The service fees were paid to CFPro Limited and Cambridge
Financial Partners LLP. Barbara Spurrier (appointed a Director of
the Company in 2013) has a financial interest in all two companies.
Amounts payable at year end and included in trade payables are
$31,425.
4,285,714 new shares were issued in July 2015 to CFPro Limited,
( a company owned by Mrs Spurrier) in lieu of fees owed of
GBP15,000, owed by the Company in respect of accounting and
administration services provided to the Company.
23 Financial instruments and financial risk factors
The carrying amounts of the financial instruments are set out
below. Details of the significant accounting policies including the
criteria for recognition, the basis of measurement and the bases
for recognition of income and expense for each class of financial
asset, financial liability and equity instrument are disclosed in
note 3.
Group Company
31 December 31 December 31 December 31 December
2015 2014 2015 2014
$'000 $'000 $'000 $'000
---------------------------- ----------- ------------- ------------- -------------
Financial Assets
Loans and receivables
(including
cash and cash equivalents) 102 214 102 182
102 214 102 182
---------------------------- ----------- ------------- ------------- -------------
Financial Liabilities
Payables and borrowings 203 1,082 203 762
203 1,082 203 762
---------------------------- ----------- ------------- ------------- -------------
Derivatives
The Group and Company have no derivative financial
instruments.
Fair values
The directors consider that the carrying amounts of financial
assets and financial liabilities approximate their fair values.
Financial risk factors
The Group has exposure to a number of different financial risks
arising from its business operations including market risks
relating to commodity prices, foreign currency exchange rates,
interest rates, credit exposures and liquidity risk.
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing risk, and the Group's
management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
The directors determine, as required, the degree to which it is
appropriate to use financial instruments or other hedging contracts
or techniques to mitigate risk. The main risk affecting such
instruments is foreign currency risk which is discussed below.
Throughout the year ending 31 December 2015 and in previous year no
trading in financial instruments was undertaken and the Group did
not have any derivative or hedging instruments.
Market risk
Market risk is the risk or uncertainty arising from possible
market movements and their impact on the performance of the
business and the value of the assets, liabilities or expected cash
flows. There has been no change to the Group's exposure to market
risks or the manner in which these risks are managed and
measured.
Foreign currency risk
Foreign currency exchange rates could impact the results of the
Group as well as the future cash flows and values of its financial
instruments. The Group undertakes transactions denominated in
foreign currencies (other than the functional currency of the
Company, GBP Sterling), with exposure to exchange rate
fluctuations.
The carrying amount of the Group's foreign currency denominated
monetary assets and monetary liabilities (excluding assets
classified as held for sale) were:
Group Company
31 December 31 31 December 31 December
2015 December 2015 2014
2014
$'000 $'000 $'000 $'000
-------------------------- ------------- ----------------- ------------- -------------
Financial Assets
Sterling 102 201 102 182
US Dollars - 13 - -
-------------------------- ------------- ----------------- ------------- -------------
102 214 102 182
-------------------------- ------------- ----------------- ------------- -------------
Financial Liabilities
Sterling 203 1,038 203 762
US Dollars - 44 - -
-------------------------- ------------- ----------------- ------------- -------------
203 1,082 203 762
-------------------------- ------------- ----------------- ------------- -------------
Impact of a 10 per
cent. change in the
sterling/dollar exchange
rate, if all other
variables were constant,
on reported losses
with a corresponding
impact on net assets (11) (94)
-------------------------- ------------- ----------------- ------------- -------------
Interest rate risk
The Group is exposed to interest rate risk because the Group
borrows and deposits funds at both fixed and floating interest
rates. The risk is managed by maintaining an appropriate mix
between fixed and floating rate cash deposits and borrowings.
The losses recorded by both the Group and the Company for the
year ended 31 December 2015 would not materially increase/decrease
if interest rates had been significantly higher/lower and all other
variables were held constant.
Credit risk
Credit risk refers to the risk that a counter-party will default
on its contractual obligations resulting in financial loss to the
Group. The Group seeks to limit credit risk on liquid funds through
trading only with counterparties that are banks with high credit
ratings assigned by international credit rating agencies.
The Group's principal financial assets are bank balances, trade
and other receivables. The Group has no significant concentration
of credit risk as exposure is spread over a number of
customers.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
year-end was:
Group Company
31 31 December 31 31
December 2014 December December
2015 2015 2014
$'000 $'000 $'000 $'000
----------------------- ------------ ------------- ----------- -----------
Trade and other
receivables excluding
prepayments 58 10 58 7
Cash and cash
equivalents 26 165 26 152
----------------------- ------------ ------------- ----------- -----------
84 175 84 159
----------------------- ------------ ------------- ----------- -----------
Liquidity risk
Liquidity risk is the risk that suitable sources of funding for
the Group's business activities may not be available. The Group
manages liquidity risk by continuously monitoring forecast and
actual cash flows and putting in place programmes for raising
capital, maintaining adequate banking facilities and managing
short-term surplus funds in bank deposits.
In managing its capital, the Group's primary objective is to
maintain a sufficient funding base to enable working capital,
exploration commitments and strategic investment needs to be met
and therefore to safeguard the Group's ability to continue as a
going concern in order to provide returns to shareholders and
benefits to other stakeholders. In making decisions to adjust its
capital structure to achieve these aims, through new share issues,
the Group considers not only its short term position but also its
long term operational and strategic objectives.
The capital structure of the Group currently consists of cash
and cash equivalents and equity comprising issued capital, reserves
and retained earnings as disclosed in Note 20 and the statement of
changes in equity. The Group is not subject to any externally
imposed capital requirements.
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The following table shows the Group's remaining contractual
maturity for its non-derivative financial liabilities with agreed
repayment periods. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the
earliest due repayment dates. The Group has no finance debt.
Year ended Year ended
31 December 2015 31 December 2014
Non interest Non interest
bearing bearing
$'000 $'000
---------------- ------------------ -----------------
Group
Within 6 months 203 1,082
203 1.082
---------------- ------------------ -----------------
Company
Within 6 months 203 762
203 762
---------------- ------------------ -----------------
24 Obligations under operating leases
The future aggregate minimum lease payments under
non-cancellable operating leases are:
Group Company
31 31 December 31 December 31 December
December 2014 2015 2014
2015
$'000 $'000 $'000 $'000
--------------------- ----------- ------------- ------------- -------------
No later than 1 year 11 29 - -
Less than 1 year,
and not later than
5 years - 11 - -
25 Exploration and evaluation commitments
The Group's planned expenditure for the near term is as
follows:
Group Company
31 December 31 December 31 December 31 December
2015 2014 2015 2014
$'000 $'000 $'000 $'000
------------------ ----------- ----------- ----------- -----------
No later than
1 year - 14,600 - -
More than 1 year,
and not later
than 5 years - 400 - -
To be in incurred
in Rest of World - 15,000 - -
------------------ ----------- ----------- ----------- -----------
The Group has minimum work programme obligations under each of
its licence agreements in Oman, Zambia and Namibia. However, the
group has not been able to secure sufficient funding to continue
with these work programme obligations and due to change in the
strategic development of the Group, the management has decided to
discontinue all its activities in the oil exploration projects.
26 Contingent liabilities
Due to the nature of the Group's discontinued business, some
contamination of oil and gas properties in which the Group had an
interest in is possible. Environmental site assessments of the
properties would be necessary to adequately determine remediation
costs, if any.
The directors have evaluated discontinued operations and
concluded that no provision for potential remediation costs is
required.
27 Events after reporting date
On 6 January 2016, the Board implemented a capital
reorganisation of the Company's shares. Each existing ordinary
shares of 0.1p each was subdivided and re-designated into new
ordinary shares of 0.01p each, and one deferred share of 0.09p of
the Company, and the Company adopted new articles of
association.
The new ordinary shares have the same rights as those accruing
under the ordinary shares held prior to the reorganisation.
On 17 February 2016, the Company issued 4,750,000,000 new
ordinary shares of 0.01p as fully paid up with existing and new
investors at a placing price of 0.03p per ordinary share. In
addition, the Company issued 361,999,056 warrants to subscribe for
new ordinary shares. On the same day, Adam Reynolds was appointed
as a director and Chairman of the Company and both Jack Keyes and
John O'Donovan resigned as directors of the Company with immediate
effect.
On 2 March 2016, the Board of the Company, subject to the
approval of shareholders, conditionally agreed to the sale of its
entire interests in Frontier Resources Oman Limited and Frontier
Resources International Inc to Mr Jack Keyes, the former chief
executive of the Company for a consideration of GBP1 and deferred
consideration, which is contingent on the achievement of certain
targets. The sales were approved by shareholders on 22 March 2016
and completed on 23 March 2016, following which, Jack Keyes'
750,000 share options at an exercise price of 5.5p were then
cancelled.
On 2 March 2016 the Company agreed to liquidate their
subsidiaries, Frontier Resources Zambia Limited and Frontier
Resources Namibia Limited. Both companies ceased trading on 11
March 2016.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEUFLUFMSEIL
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