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 £1,425,000 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
Adam Reynolds, Chairman
|
Tel: +44 (0) 7785 908158
|
Beaumont Cornish (Nomad)
Michael Cornish
Emily Staples
|
Tel: +44 (0)20 7628 3396
|
Beaufort Securities Limited (Broker)
Jon Belliss
|
Tel: +44 (0)20 7382 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 31st 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
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
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 (£). 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 2014)
|
Acquisition of interests in Joint Operations
|
1 January 2016
|
IFRS 9
|
Financial Instruments - classification and measurement of financial assets
|
1 January 2018
|
IFRS 15
|
Revenue from contracts with customers
|
1 January 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
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 (£). The financial statements have been presented in US Dollars. The effective exchange rate at 31 December 2015 was £1
=US$1.48 (2014: £1 = 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
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 2015
|
31 December 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 ended
|
Year ended
|
|
|
31 December 2015
|
31 December 2014
|
|
|
$'000
|
$'000
|
|
|
|
|
Administrative expenses
|
|
1,030
|
421
|
Exceptional item- assets impairment
|
|
1,825
|
-
|
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
31 December 2015
|
Year ended
31 December 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
31 December 2015
|
Year ended
31 December 2014
|
Number of
employees
No
|
|
6
|
6
|
Wages, salaries and
fees
$'000
|
|
122
|
650
|
Directors' remuneration comprises:
|
|
|
Year ended
31 December 2015
|
Year ended 31 December 2014
|
|
|
|
$'000
|
$'000
|
Executive director salaries1
|
|
|
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 January 2015
|
Granted/ (Lapsed)
|
Exerc-ised
|
As at 31 December 2015
|
Exercise Price (pence)
|
Date of Grant
|
Earliest Exercise 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 2015
|
As at 31 December 2014
|
|
Number of
share
options
|
* WAEP
(pence)
|
Number of
share options
|
* WAEP (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
31 December 2015
|
Year ended
31 December 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 of share options grant
|
Pence
|
-
|
-
|
Quoted share price at time of grant
|
Pence
|
-
|
-
|
|
Cents
|
-
|
-
|
Quoted share price - high
|
Pence
|
0.95
|
4.000
|
Quoted share price - low
|
Pence
|
0.08
|
0.750
|
Unexercised warrants
Issue date
|
Exercise price
|
Number
|
Exercisable
|
Expiry date
|
05/07/2013
|
6.0p
|
1,100,555
|
Any time before expiry
|
05/07/2018
|
05/07/2013
|
6.0p
|
1,440,000
|
Any time before expiry
|
05/07/2018
|
05/07/2013
|
6.0p
|
416,666
|
Any time before expiry
|
05/07/2016
|
13/11/2014
|
1.0p
|
12,500,000
|
Any time before 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
31 December
2015
|
Year ended
31 December
2014
|
|
|
$'000
|
$'000
|
|
|
|
|
Other interests
|
|
7
|
2
|
|
|
|
|
11 Taxation
|
|
Year ended
31 December 2015
|
Year ended
31 December 2014
|
|
|
$'000
|
$'000
|
Corporation tax
|
|
|
|
Current corporation tax
|
|
-
|
-
|
Deferred tax
|
|
|
|
Deferred tax
|
|
-
|
-
|
Corporation tax is calculated at the following rates
|
|
20%
|
21%
|
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
31 December 2015
|
Year ended
31 December
2014
|
|
|
$'000
|
$'000
|
Loss before tax on ordinary activities
|
|
(3,101)
|
(1,225)
|
Corporation tax calculated at rate applicable for year
|
|
(620)
|
(257)
|
Effect of overseas and other taxes at different rates
|
|
-
|
-
|
Expenses not deductible for tax purposes
|
|
483
|
75
|
Effect of unused tax losses carried forward
|
|
137
|
182
|
Effect of deferred tax movements
|
|
-
|
-
|
Taxation credit
|
|
-
|
-
|
Effective percentage tax rate for year
|
|
0%
|
0%
|
The Group has incurred tax losses for the year and therefore a corporation tax charge does not
arise.
The Group has unrelieved tax losses that that have not been recognised as a deferred tax as the
recovery of this benefit is dependent on the future profitability of Group entities, the timing of which cannot be reasonably
foreseen (see note 19).
12 Loss per share
The basic loss per share has been calculated using the loss for the year and the weighted
average number of ordinary shares outstanding during the year, as follows:
Basic
|
|
Year ended
31 December 2015
|
Year ended
31 December
2014
|
Loss for the year - continuing operations ($'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 interest
|
Place of business
|
Date & country of incorporation
|
Frontier Resources International Inc.
|
100%
|
U.S.A.
|
24 Feb 1989
|
U.S.A.
|
Frontier Resources Oman Ltd
|
100%
|
Oman
|
9 May 2011
|
U.K.
|
Frontier Resources Namibia Ltd
|
100%
|
Namibia
|
2 August 2011
|
U.K.
|
Frontier Resources Zambia Ltd
|
100%
|
Zambia
|
7 November 2011
|
U.K.
|
The Company's investments in, and loans to, subsidiary undertakings is as follows:
Company
|
|
31 December
2015
|
31 December
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
$'000
|
E&EA
$'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
31 December 2015
|
Year ended
31 December 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.
15 Trade and other receivables
|
Group
|
Company
|
|
31 December 2015
|
31 December 2014
|
31
December
2015
|
31
December
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 2015
|
31 December 2014
|
31 December 2015
|
31 December 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
Group
|
|
|
Year ended
31 December 2015
|
Year ended
31 December
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
Company
|
|
|
Year ended
31 December 2015
|
Year ended
31 December
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 2015
|
31 December 2014
|
31 December 2015
|
31 December 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
Capital
|
Deferred
shares
|
Deferred
shares
|
|
Share
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)
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
31 December 2015
|
Year ended
31 December 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 £15,000, 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 2015
|
31 December 2014
|
31 December 2015
|
31 December 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, £ 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 2015
|
31 December 2014
|
31 December 2015
|
31 December 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
December
2015
|
31 December 2014
|
31
December
2015
|
31
December
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.
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
31 December 2015
|
Year ended
31 December 2014
|
|
|
Non interest
bearing
|
|
Non interest
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 December 2015
|
31 December 2014
|
31 December 2015
|
31 December 2014
|
|
$'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 2015
$'000
|
31 December 2014
$'000
|
31 December 2015
$'000
|
31 December 2014
$'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 £1 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