Altona Energy PLC - Final Results
RNS Number : 7601L
Altona Energy PLC
28 December 2018
 

                                               

 

 

Altona Energy Plc

 

("Altona" or "the Company")

 

Final Results

 

 

Altona (AIM: ANR), a coal exploration company in South Australia, announces its audited results for the year ended 30 June 2018 and that its Annual General Meeting is to be held at the offices of PKF Littlejohn LLP, 1 Westferry Circus, London E14 4HD on Friday 25th January 2019 at 11.30 am.

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

 

 

-ends-

 

Enquiries

 

Altona Energy plc

Nicholas Lyth, Chief Executive Officer

 

 

+44 7769 906 686

 

Northland Capital Partners Ltd (Nomad and Broker)

Matthew Johnson / Gerry Beaney / Jamie Spotswood

(Corporate Finance)

Abigail Wayne (Corporate Broking)

 

 

+44 20 3861 6625

 

 

CHIEF EXECUTIVE OFFICER'S STATEMENT

 

Overview

The Group's strategy remains focused on extracting value from the Arckaringa Project, South Australia, a major coal resource exceeding 7 billion tonnes (1.3 billion tonnes historic JORC compliant) and we continue to have the support of the South Australian Government's Mining Department, with whom we work closely. The options available to extract value from this resource have been increased by Altona's success in obtaining an exclusive license to use pyrolysis technology in Australia and the People's Republic of China ("PRC").

In addition, Altona remains in discussions with Leinad Ltd, the owners of the pyrolysis technology with a view to participating in their European pyrolysis projects.

 

Review of the Year

During the year Altona successfully renewed its Exploration Licenses and these are scheduled for renewal again in June 2019.

Some non-drilling exploratory work was conducted on the Westfield tenement and it was found that, based on the hydrological and extant drilling data, that the Willoughby seam is present in this area at a depth and thickness that may be viable for mining operations. A drilling program was planned but, due to developments in the availability of pyrolysis technology, this has been deferred. The reason for this is because pyrolysis requires different coal characteristics from that best suited to conventional mining and exportation. As a result, it may be that coal in tenements controlled by Altona other than Westfield are most suitable.

On 28 August 2018, after the end of this financial year, Altona entered into a license agreement with Leinad Ltd whereby Altona was granted exclusive rights to the Leinad Ltd pyrolysis technology in Australia and PRC. Subsequent to this, Altona was approached by the holder of a large coal resource in Australia with a view to identifying how to release value in their asset using Altona's pyrolysis technology. These discussions are ongoing.

To support ongoing operations, the following issues of shares took place in the financial year

Date                Number of Shares      Price per Share           Total Consideration

7/7/17              100,000,000                0.15p                           £150,000

13/10/17          420,000,000                0.05p                           £210,000

23/11/17          147,000,000                0.50p                           £735,000

 

 

Board Changes

Henry Kloepper was appointed as a Non-Executive Director on 3 November 2017, bringing to the Board a wealth of experience in the resources sector over a 30 year career. 

Nick Lyth was made Chief Executive Officer and Phillip Sutherland was made Director of Operations (Australia) on 23 November 2017. On the same day, options were granted to the members of the board under two performance indicators; the first being when the share price reaches 2.5 pence; the second being split into two tranches, when the Group commences a drilling programme and when it completes a pre-feasibility study.

 

Subsequent to the year, we welcomed Robert Hales and Tim Jones to the Board and also announced that Phil Sutherland would be leaving the Company on 29 January 2019.

 

Financial Review

 

During the period under review the Group made a loss before taxation of £645,000 (2017: loss £341,000).

 

As at 30 June 2018, the Group had cash of £391,000 (2017: £15,000).

 

Outlook

Altona is a small company with a very large coal asset and a licence for potentially innovative pyrolysis technology.

Altona will seek to extract value from its coal asset. In addition, Altona has the opportunity to generate revenue elsewhere as a result of it being granted an exclusive licence for pyrolysis technology in Australia and PRC.

Furthermore, Altona remains in discussions with Leinad Ltd with a view to participation in its European pyrolysis-based opportunities. 

 

 

Nick Lyth

Chief Executive Officer

28 December 2018

 

STRATEGIC REPORT

 

Principal Activity

The principal activity of the Group is the development of its Arckaringa Coal Project in South Australia. 

 

 

BUSINESS RISK REVIEW

 

Principal business risks

The Directors have identified the following principal risks in regards to the Group's future.  The relative importance of risks faced by the Group can, and is likely to, change as the Group executes its strategy and as the external business environment evolves. The financial risks to which the Group is exposed are detailed out in Note 2.

 

Strategic

Strategy risk

The Group's strategy may not deliver the results expected by shareholders. The Directors regularly monitor the appropriateness of the strategy, taking into account both internal and external factors, together with progress in implementing the strategy, and modify the strategy as may be required based on developments. Key elements of this process are the Group's monthly reporting and regular Board meetings.

 

Concentration risk

The Group has one core asset being the Arckaringa Project. The Board has entered into the joint venture with Sino-Aus and Wintask to share the risk of a single-asset portfolio.

 

Operational

Development risk

The Arckaringa Project may not result in commercial development. There is no certainty of success from the existing portfolio of licences. The Group seeks to mitigate the development risk through the experience and expertise of the Group's specialists and the Group's partners in the Arckaringa joint venture.

 

Other business risks

In addition to the current principal risks identified above and general business risks, the Group's business is subject to risks inherent in hydrocarbon development and production activities. There are a number of potential risks and uncertainties which could have a material impact on the Group's long-term performance and could cause actual results to differ materially from expected and historical results.  The Group has identified certain risks pertinent to its business including:

 

Strategic and Economic

•   Failure to deliver on strategy and plans

•   Business environment changes

•   Limited diversification

 

Operational

•   Failure to add value through development

• Difficulty in obtaining, maintaining or renewing Licences/ Approvals

 

Commercial

•   Failure to maximise value from Arckaringa

•   Loss of interest in key assets

•   Regulatory and legal compliance

 

Human Resources and Management Processes

•  Failure to recruit and retain key personnel

•  Human error or deliberate negative action

•  Inadequate management processes

 

Financial

• Restrictions in capital markets impacting available financial resource

•  Cost escalation and budget overruns

•  Fraud and corruption

 

 

 

The Directors regularly monitor such risks, using information obtained or developed from external and internal sources, and will take actions as appropriate to mitigate these.  Effective risk mitigation may be critical to the Group in achieving its strategic objectives and protecting its assets, personnel and reputation. The Group assesses its risk on an ongoing basis to ensure it identifies key business risks and takes measures to mitigate these. Other steps include regular Board review of the business, monthly management reporting, financial operating procedures and anti-bribery management systems. The Group reviews its business risks and management systems on a regular basis.

 

 

BUSINESS REVIEW

 

The developments during the year are detailed in the Chief Executive Officer's Report on pages 3 to 5.

 

 

KEY PERFORMANCE INDICATORS

 

The key performance indicators in assessing the completion of this activity that are monitored on a regular basis are:

 

-    Progress of Bankable Feasibility Study ("BFS"). Monitoring licence commitments and environmental compliance

-    Cash management - sufficient to meet its commitments

 

The Group cash at 30 June 2018 was £391,000 (2017: £15,000).

 

 

 

On behalf of the Board:

 

 

 

 

Nicholas Lyth

Director

28 December 2018

 

 

 

DIRECTORS' REPORT

 

The Directors are pleased to present their report and the audited financial statements of the Group and the Company for the year ended 30 June 2018. Certain information required by the Companies Act 2006 relating to the information to be provided in the Directors' Report is set out in the Strategic Report and includes the principal activity, business review, principal risks and uncertainties.

 

COMPANY INFORMATION

Altona Energy Plc is a publicly listed company incorporated and domiciled in England & Wales.  The Group's principal subsidiaries are all registered in Australia.  The Company's ordinary shares are traded on the AIM market operated by the .  The Company's principal activity is that of being a listed holding company for subsidiaries owning coal exploration licences in South Australia. Going forward the Company will seek to implement their exclusive licence of pyrolysis technology in Australia and PRC.

 

DIVIDENDS

 

The Directors do not recommend the payment of a dividend (2017: £Nil).

 

 

FINANCIAL RISK MANAGEMENT

Note 2 of the financial statements details the financial risk factors affecting the Group and summarises the Group's policies for mitigating such risks through holding and issuing financial instruments.  These policies have been followed during the current and prior year.

 

DIRECTORS AND DIRECTORS' INTERESTS

The Directors of the Group and the Company during the year and their interests in the ordinary share capital of the Company were:

 

 

Number of ordinary shares

Number of Options

 

30 June 2018

30 June 2017

30 June 2018

30 June 2017

Phillip Sutherland

2,000,000

940,564

90,000,000

-

Qinfu Zhang

-

-

47,500,000

-

Nicholas Lyth

1,300,000

1,300,000

112,500,000

-

Chi Ma 1

-

-

20,000,000

-

Henry Kloepper

-

-

-

-

 

1 Chi Ma is the representative Director of Sino-Aus Energy Group Limited, which is interested in 100,000,000 shares.

 

 

THIRD PARTY INDEMNITY INSURANCE

The Company and the Group provide the Directors' and Officers' liability insurance at a cost of £6,832 (2017: £6,500).

 

 

POST REPORTING DATE EVENTS

Details of post reporting date events are disclosed in Note 17 of the financial statements.

 

 

FUTURE DEVELOPMENTS

 

The future developments are detailed in the Chief Executive Officer's Statement (Pg.3-5).

 

GOING CONCERN

 

The Company raises money for exploration and capital projects as and when required. There can be no assurance that the Group's projects will be fully developed in accordance with current plans or completed on time or to budget or meet the minimum spend requirements of the licenses held. Future work on the development of these projects, the levels of production and financial returns arising therefrom, may be adversely affected by factors outside the control of the Group.

 

Notwithstanding the loss incurred during the year under review, the Directors have a reasonable expectation that the Group will be able to raise funds to provide adequate resources to continue in operational existence for the foreseeable future and meet committed work programmes. It will therefore continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details on their assumptions and their conclusion thereon are included in the statement on going concern included in note 1 to the Financial Statements.

 

The Auditors have made reference to going concern by way of a material uncertainty within their audit report.

 

AUDITOR

 

The Directors review the terms of reference for the auditor and obtain written confirmation that the firm has complied with its ethical code on ensuring independence. The level of fees charged is reviewed by the Board to ensure they remain competitive and to ensure no conflicts of interest arise. PKF Littlejohn LLP has indicated its willingness to continue in office as auditor of the Group.

 

REMUNERATION

 

The Group remunerates the Board at a level commensurate with the size of the Group and the experience of its Directors. The Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the Group with regard to this issue.  Details of Directors' emoluments are set out in Note 5 to the Financial Statements.

 

 

CORPORATE GOVERNANCE

 

Overview

Chairman of the Board of Directors of Altona Energy PLC (Altona, We, or the Company/Group as the context requires), has a responsibility to ensure that Altona has both sound corporate governance and an effective Board. Altona is an AIM listed mining Company focusing on the development and operation of mining projects in the Australia. The Company intends to implement their exclusive licence of pyrolysis technology in Australia and PRC.

 

Altona's Board has adopted the principles of the Quoted Companies Alliance Corporate Governance Code (QCA Code) in accordance with the 's recent changes to the AIM Rules, requiring all AIM-listed companies to adopt and comply or explain non-compliance with a recognised corporate governance code.  The QCA Code identifies ten principles to be followed in order for companies to deliver growth in long term shareholder value, encompassing an efficient, effective and dynamic management framework accompanied by communication to promote confidence and trust. This report follows the structure of these guidelines and explains how we have applied the guidance as well as disclosing any areas of non-compliance. We will provide annual updates on our compliance with the QCA Code. The Board considers that the Group complies with the QCA Code so far as it is practicable having regard to the size, nature and current stage of development of the Company, and will disclose any areas of non-compliance in the text below.

 

The sections below set out the ways in which the Group applies the ten principles of the QCA Code in support of the Group's medium to long-term success.

 

Key governance changes during the year include the formal adoption of the QCA Code.

 

QCA Principles

 

1.         Establish a strategy and business model which promotes long-term value for shareholders

The Board has concluded that the highest medium and long-term value can be delivered to its shareholders through the Company's objective of developing mining projects in Australia. Altona's revenue stream model is founded upon the roll-out of mining sites, funded through a combination of equity and asset finance via dedicated subsidiaries.

 

The Board intends to deliver shareholder returns through capital appreciation. Challenges to delivering strategy, long-term goals and capital appreciation are uncertainty in relation to organisational, operational, financial and strategic risks, all of which are outlined on pages 33-35 of the 2018 Annual Report and in the Risk Management section below, as well as steps the Board takes to protect the Company by mitigating these risks and secure a long-term future for the Company.

 

2.         Seek to understand and meet shareholder needs and expectations

The Board recognises the importance of communication with its stakeholders and is committed to establishing constructive relationships with investors and potential investors in order to assist it in developing an understanding of the views of its shareholders.

 

Altona also maintains a dialogue with shareholders through formal meetings such as the AGM, which provides an opportunity to meet, listen and present to shareholders, and shareholders are encouraged to attend in order to express their views on the Company's business activities and performance.  Members who have queries regarding the Company's AGM can contact the Registrars Shareholder helpline is 01252 821 390 or +44 1252 821 390 if calling from outside the UK

 

 

 

 

The Board welcomes feedback from key stakeholders and will take action where appropriate. Nicholas Lyth is responsible for shareholder liaison, and meets shareholders regularly. Analysts provide the Board with updates on the Company's business and how strategy is being implemented, as well as to hear views and expectations from shareholders. The views of the shareholders expressed during these meetings are reported to the Board, ensuring that all members of the Board are fully aware of the thoughts and opinions of shareholders. 

 

Information on the Investor Relations section of the Company's website is kept updated and contains details of relevant developments, Annual and Interim Results, Regulatory News Service announcements, presentations and other key information.

 

3.     Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Board recognises that the long-term success of the Company is reliant upon the efforts of employees, regulators and many other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships.  The Company prepares and updates its strategic plan regularly together with a detailed rolling budget and financial projections which consider a wide range of key resources including staffing, consultants and utility providers.

 

All employees within the Company are valued members of the team, and the Board seeks to implement provisions to retain and incentivise all its employees. The Company offers equal opportunities regardless of race, gender, gender identity or reassignment, age, disability, religion or sexual orientation.  The Company has five employees so are in constant contact and seek to provide continual opportunities in which issues can be raised allowing for the provision of feedback. This feedback process helps to ensure that new issues and opportunities that arise may be used to further the success of the Company. Share options and other equity incentives are offered to employees.

 

The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company. The Company regularly engages with local public relations agents to gauge support for sites when applying for planning and also consult local concerns and issues in pre-planning where required. 

 

4.      Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board recognises the need for an effective and well-defined risk management process and it oversees and regularly reviews the current risk management and internal control mechanisms. The 2018 Annual Report outlines the key risks to the business, see pages 33-35.

 

The Board regularly reviews the risks facing the Company and seeks to exploit, avoid or mitigate those risks as appropriate. The Board is responsible for the monitoring of financial performance against budget and forecast and the formulation of the Company's risk appetite including the identification, assessment and monitoring of Altona Energy Plc's principal risks. The Audit Committee has the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. Risk management is regularly on the agenda of the Board, Audit Committee and other senior management meetings. Additionally, the Board reviews the mechanisms of internal control and risk management it has implemented on an annual basis, and assesses both for effectiveness.

 

The risk assessment matrix below sets out and categorises key risks, and outlines the mitigating actions which are in place. This matrix is updated as changes arise in the nature of risks or the mitigating actions implemented, and the board reviews these on a regular basis.  Altona Energy Plc has identified the principal risks to the Company achieving its objectives as follows:

 

 

 

 

Risk

Potential Impact

Mitigation

Availability of technology that is cost efficient to the company to extract its resources in an economic manner

Whilst the company's coal resources are vast it is difficult to determine the types of coal deposits that lie within its licenced areas. The type of extraction use of the coal will be driven by market demand and prices.

A conventional coal mining technique is most likely to be selected by the group to undertake extraction of the coal. Some mining techniques such as underground coal gasification and coal seam methane are unlikely to be chosen by the company as they are early stage technologies that are subject to environmental and other issues.

Exploration risks

Exploration is speculative in nature, involves many risks and is frequently unsuccessful. There can be no assurance that any prospect drilled will result in an increase in the proven and probable reserve.

The board has started further exploration in new areas of the tenements for which renewal applications have been made and the group hopes to take advantage of the higher coal prices

Ability to maximise value from its sole asset

There is a possibility that the company could fail to deliver on its strategic plans as the business environment could change and there is limited diversification available and there are always difficulties in obtaining, maintaining and renewing licenses/approvals especially as there are minimum spend requirements.

Management's track record, of determination and perseverance coupled with their ability to raise finance  give us confidence that we will continue to maintain our licences.

Volatility of demand for coal

Global demand for coal is estimated to be flat between 2018 and 2022 according to the International Energy Agency's annual coal market report.

Coal demand dropped in China, the United States and the European Union but has increased in India and across many parts of South East Asia and shows no signs of slowing down in these regions.

Political and commercial risk

The company's licenses are based in Australia where legal uncertainties, ambiguities, inconsistencies and anomalies could arise which would not necessarily exist in the UK.  In particular, difficulties may arise in seeking to obtain redress through the legal courts.

Australia is a democratic country with a legal system based on UK law.

Ability to raise further funds

Our business model depends on our ability to raise equity funding to provide sufficient working capital for its current operations.

There can be no guarantee that we will be able to raise funds on terms that are commercially viable in the context of our business model.

Our key investors have continued to support the company's operations.

 

The Board considers that in light of the control environment described above, an internal audit function is not considered necessary or practical due to the size of the Company and the day to day control exercised by the Executive Directors. However, the Board will monitor the need for an internal audit function. The Board has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems.

 

 

5.         Maintain the Board as a well-functioning, balanced team led by the Chair

The Board comprises Tim Jones (Non-Executive Chairman), Nicholas Lyth (Chief Executive Officer), Qinfu Zhang (Executive Director), Phillip Sutherland (Operations Director), Chi Ma (Non-Executive Director), Henry Kloepper (Non-Executive Director) and Robert Hales (Non-Executive Director). The Executive Directors work full time for the Company, and the Non-Executive Directors are expected to dedicate not less than 30 days per annum.

 

The Board recognises the QCA recommendation for a balance between Executive and Non-Executive Directors and the recommendation that there be at least two Independent Non-Executives. The Board has taken this into consideration and has appointed Henry Kloepper, Robert Hales and Timothy Jones during the year and post year end. In addition to this, all Directors are encouraged to use their judgement and to challenge matters, whether strategic or operational, enabling the Board to discharge its duties and responsibilities effectively. The Board maintains that the Board's compositions will be frequently reviewed as the Company develops.

 

The Board meets regularly and is responsible for formulating, reviewing and approving the Group's strategy, budgets, performance, major capital expenditure and corporate actions. The Company has in place an Audit Committee, a Remuneration Committee and an AIM Rules Compliance Committee with formally delegated rules and responsibilities. Meetings are open and constructive, with every Director participating fully. The Board aims to meet at least 6 times in the year, however it is noted that only 5 board meetings were held during the year. Board document authors are made aware of proposed deadlines prior to meetings.

 

The Directors of the Company are committed to sound governance of the business and each devotes sufficient time to ensure this happens. The table below sets out attendance statistics for each Director at Board and, where relevant, Committee meetings held during the financial year.

 

Directors

Meetings Attended

Qinfu Zhang

5

Nicholas Lyth

4

Philip Sutherland

5

Chi Ma

1

Henry Kloepper

2

 

Directors' conflict of interest

The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

 

6.     Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Company believes that the current balance of skills in the Board as a whole reflects a very broad range of personal, commercial and professional skills, and notes the range of financial and managerial skills. The Non-Executive Chairman maintains ongoing communications with Executives between formal Board meetings.

 

Biographical details of the Directors can be found on the Company's website.

 

Stephen Ronaldson is the Company Secretary and helps Altona comply with all applicable rules, regulations and obligations governing its operation. The Company's NOMAD assists with AIM matters and ensures that all Directors are aware of their responsibilities.

 

In addition to their general Board responsibilities, Non-Executive Directors are encouraged to be involved in specific workshops or meetings, in line with their individual areas of expertise. The Board is kept abreast of developments of governance and AIM regulations. The Company's NOMAD provides annual Board AIM Rules refresher training as well as the initial training as part of a new Director's on boarding. All Directors develop their skills and capabilities through their continuing experiences.

 

The Directors have access to the Company's NOMAD, company secretary, lawyers and auditors as and when required and are able to obtain advice from other external bodies when necessary. If required, the Directors are entitled to take independent legal advice and if the Board is informed in advance, the cost of the advice will be reimbursed by the Company.

 

Board composition is always a factor for contemplation in relation to succession planning. The Board will seek to consider any Board imbalances for future nominations, with areas considered including board independence and gender balance.  The Group considers however that at this stage of its development and given the current size of its Board, it is not necessary to establish a formal Nominations Committee.  Instead, appointments to the Board are made by the Board as a whole.  This position however, is reviewed on a regular basis by the Board.

 

7.     Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Directors consider that the Company and Board are not yet of a sufficient size for a full Board evaluation to make commercial and practical sense. In the frequent Board meetings/calls, the Directors can discuss any areas where they feel a change would benefit the Company, and the Company Secretary remains on hand to provide impartial advice. As the Company grows, it expects to expand the Board and with the Board expansion, re-consider the need for Board evaluation.

 

In view of the size of the Board, the responsibility for proposing and considering candidates for appointment to the Board as well as succession planning is retained by the Board. All Directors submit themselves for re-election at the AGM at regular intervals.

 

8.         Promote a corporate culture that is based on ethical values and behaviours

The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders, and that the Company's shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. 

 

The Board places great importance on the responsibility of accurate financial statements and auditing standards comply with Financial Reporting Council's (FRC's) and Ethical Standards for Auditors.  The Board places great importance on accuracy and honest, and seeks to ensure that this aspect of corporate life flows through all that the Company does.

 

A large part of the Company's activities is centred upon an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives.  The Directors consider that the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. Whilst the Company has a small number of employees, the Board maintains that as the company grows it intends to maintain and develop strong processes which promote ethical values and behaviours across all hierarchies.

 

The Board has adopted an anti-corruption and bribery policy (Bribery Policy). The Bribery Policy applies to all Directors and employees of the Group, and sets out their responsibilities in observing and upholding a zero-tolerance position on bribery and corruption, as well as providing guidance to those working for the Company on how to recognise and deal with bribery and corruption issues and the potential consequences.

 

The Board complies with Rule 21 of the AIM Rules for Companies relating to dealings in the Company's securities by the Directors and other Applicable Employees. To this end, the Company has adopted a code for Directors' dealings appropriate for a company whose shares are admitted to trading on AIM and takes all reasonable steps to ensure compliance by the Directors and any relevant employees.

 

9.     Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

 

The Board is committed to, and ultimately responsible for, high standards of corporate governance.  The Board reviews the Company's corporate governance arrangements regularly and expect to evolve these over time, in line with the Company's growth. The Board delegates responsibilities to Committees and individuals as it sees fit.

 

The Chairman's principal responsibilities are to ensure that the Company and its Board are acting in the best interests of shareholders. His leadership of the Board is undertaken in a manner which ensures that the Board retains integrity and effectiveness, and includes creating the right Board dynamic and ensuring that all important matters, in particular strategic decisions, receive adequate time and attention at Board meetings.

 

The Chief Executive of Altona is the key contact for shareholder liaison and all other stakeholders. Executive Directors are responsible for the general day-to-day running of the business and developing corporate strategy.

 

The CEO has, through powers delegated by the Board, the responsibility for leadership of the management team in the execution of the Group's strategies and policies and for the day-to-day management of the business. He is responsible for the general day-to-day running of the business and developing corporate strategy while the Non-Executive Directors are tasked with constructively challenging the decisions of executive management and satisfying themselves that the systems of business risk management and internal financial controls are robust.

 

All Directors participate in the key areas of decision-making, including the following matters:

-       Strategy

-       Budgets

-       Performance

-       Major Capital Expenditure

-       Corporate Actions

 

The Board delegate's authority to three Committees to assist in meeting its business objectives, and the Committees meet independently of Board meetings. The Board recognises that Committees should comprise of at least 2 independent Non-Executive Directors, and has addressed during the year and with further post year end appointments. The membership of each Committee is listed below.

 

The Board

The Board meets regularly throughout the year. To enable the Board to perform its duties, each of the Directors has full access to all relevant information and to the services of the Company Secretary. If necessary the Non-Executive Directors may take independent professional advice at the Group's expense. The Board currently includes two Non-Executive Directors. The Board has delegated specific responsibilities to the committees described below.

 

The Audit Committee

The Audit Committee currently comprises Phillip Sutherland (Chairman) and Nicholas Lyth (Chief Executive Officer), with two meetings held during the year ended 30 June 2018. The Committee reviews the Group's annual and interim financial statements before submission to the Board for approval. The Committee also reviews reports from Management and the external auditor on accounting and internal control matters. When appropriate, the Committee monitors the progress of action taken in relation to such matters. The Committee also recommends the appointment of, and reviews the fees of, the external auditor.

 

The Remuneration Committee

The Remuneration Committee currently is made up of Phillip Sutherland (Chairman) and Nicholas Lyth (Chief Executive Officer), with two meetings held during the year ended 30 June 2018.  It is responsible for reviewing the performance of the Directors and for setting the scale and structure of their remuneration, paying due regard to the interests of shareholders as a whole and the performance of the Group.

 

10.      Shareholder Communication

 

The Company regularly communicates with, and encourages feedback from, its shareholders who are its key stakeholder group. The Company's website is regularly updated. The Company's contact details are on the website should stakeholders wish to make enquiries of management. Additional information can be found on the Company's website at www.altonaenergy.com.

 

CONTROL PROCEDURES

The Board has approved financial budgets and cash forecasts. In addition, it has implemented procedures to ensure compliance with accounting standards and effective reporting.

 

 

PROVISION OF INFORMATION TO AUDITOR

As far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware.  Each Director has taken appropriate steps to ensure that they are aware of such relevant information, and that the Company's auditor is aware of that information.

 

ANNUAL GENERAL MEETING

This report and the Financial Statements will be presented to shareholders for their approval at the Company's Annual General Meeting ("AGM"). The Notice of the AGM will be distributed to shareholders together with the Annual Report.

 

 

 

 

 

 

 

 

On behalf of the Board:

 

 

 

 

 

 

Nicholas Lyth

Director

28 December 2018

DIRECTORS' RESPONSIBILITIES

 

 

 

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year.  Under that law, the Directors have elected to prepare the group and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period.  The Directors are also required to prepare financial statements in accordance with the rules of the for companies trading securities on the Alternative Investment Market. 

 

In preparing these financial statements, the Directors are required to:

 

·       select suitable accounting policies and then apply them consistently;

 

·       make judgements and accounting estimates that are reasonable and prudent;

 

·       state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;

 

·       prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

 

Website publication

 

The Directors are responsible for ensuring the annual report and the financial statements are made available on its website.  Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the Company's website is the responsibility of the Directors.  The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

 

The company is compliant with AIM Rule 26 regarding the Company website.

 

 

 

 

 

 

Nicholas Lyth

Director

28 December 2018

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ALTONA ENERGY PLC

Opinion

We have audited the Financial Statements of Altona Energy Plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 30 June 2018 which comprise the Statement of Consolidated Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Cash Flows, the Consolidated and Company Statements of Changes in Equity and the related notes to the Financial Statements, including a summary of significant accounting policies. 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.

In our opinion:

·      the Financial Statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 June 2018 and of the Group's and Parent Company's loss for the year then ended;

·      the Group Financial Statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

·      the Parent Company Financial Statements have been properly prepared in accordance with IFRSs 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report. We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1 in the Financial Statements, which identifies conditions that may cast significant doubt on the Group's and Company's ability to continue as a going concern. The Group incurred a net loss of £645k during the year ended 30 June 2018 and at that date the Group held net current assets of £338k.

 

The Financial Statements have been prepared on the going concern basis which is reliant on the Group obtaining funding in order to meet the minimum license spend requirements and working capital needs.

 

As stated in note 1, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the ability of the Group and Company to continue as a going concern.

 

Our opinion is not modified in respect of this matter.

 

Our application of materiality

The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. Group materiality was set at £305,000 based on a blend of loss before tax and net assets. Company materiality was set at the same level. For each component in the scope of our Group audit, we allocated a materiality that is not higher than our overall group materiality.

 

An overview of the scope of our audit

As part of designing our audit we determined materiality, as above, and assessed the risk of material misstatement in the Financial Statements. In particular, we looked at areas requiring the Directors to make significant judgements and estimates, for example in respect of the recoverability of intangible assets, and considered future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

 

The UK operations and consolidation are accounted for from the UK and the subsidiaries from Australia. We conducted a full scope audit of the Group and Company numbers, with sufficient appropriate audit procedures carried out on the Australian subsidiaries for the purposes of the consolidation.

 

Our audit was conducted from our London office where the audit team was based, with regular interaction with key group personnel responsible for the management of the Group and the accounting function.

 

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Key Audit Matter

How the scope of our audit responded to the key audit matter

Intangible Fixed Assets

 

Capitalised exploration and evaluation costs in relation to the Arckaringa basin licences total £11.2m.

 

The existing exploration licenses were renewed in the year and expire in June 2019.

 

The exploration licenses contain minimum expenditure requirements which are required to be met prior to expiration.

 

There is a risk that these exploration and evaluation assets capitalised as Intangible Assets are impaired.

 

We have performed an impairment review of intangible assets which considered the areas listed as indicators of impairment under IFRS 6. Our work included the following:

 

·      Obtaining copies of the exploration licenses to confirm they have been renewed in the year;

·      Review of the renewed exploration licenses to ascertain expiry dates and minimum spend requirements;

·      Discussion with management and identification of a work plan to meet minimum spend requirements prior to expiry of the licenses;  and

·    Reviewing the post year end cash position and management future plans for expenditure on the licenses.

 

Based on the audit work performed we do not consider intangible assets as at 30 June 2018 to be materially misstated. It is however important to draw users attention to the fact that the recoverable value of the intangible assets is dependent on the Group meeting minimum spend requirements of AUD 2,240,000. Failure to meet the minimum spend requirement, which is dependent on sufficient funds being available, may result in the loss of the licenses or a reduction in the licence area. As such, failure to obtain the necessary license renewals may result in an impairment to the carrying value of the intangible assets held.

 

 

Going concern would also have been identified as a Key Audit Matter if it were not separately disclosed in the audit report.

Other information

The other information comprises the information included in the Annual Report, other than the Financial Statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the Group and Parent Company Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the Financial Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·      the information given in the strategic report and the directors' report for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements; and

·    the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which 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.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the Group and Parent Company Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Group and Parent Company Financial Statements, the directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

A further description of our responsibilities for the audit of the Financial Statements is located on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of Our Report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 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.

 

 

 

 

 

 

Joseph Archer (Senior statutory auditor)                                                                 1 Westferry Circus

For and on behalf of PKF Littlejohn LLP                                                                         Canary Wharf

Statutory auditor                                                                                                           London E14 4HD

28 December 2018

 

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

For the year ended 30 June 2018

 

 

 

 

Group

 

 

 

 

 

Notes

2018

£'000

2017

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

Administrative expenses

 

 

Operating loss

Finance costs

 

 

Loss before taxation

 

 

Tax credit

 

Loss for the year attributable to the

equity holders of the parent

 

(645)

     (341)

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

Exchange differences on translating foreign operations that may be subsequently reclassified to profit or loss

 

 

(575)

537

 

Total comprehensive income attributable to the equity holders of the parent

 

(1,220)

     196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (expressed in pence per share)

- Basic attributable to the equity holders of the parent*

 

6

(63.05)p

(38.23)p

 

- Diluted attributable to the equity holders of the parent*

6

(63.05)p

(38.23)p

 

 

 

 

 

 

 

 

* post 1:1000 share consolidation (see Note 6)

 

 

All of the above operations during the year are continuing.

 

 

 

 

 

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

As at 30 June 2018

 

 

Notes

Group

2018

£'000

Group

2017

£'000

Company

2018

£'000

Company

2017

£'000

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

8

11,219

11,801

-

-

Investment in subsidiaries

9

-

-

1,432

1,432

Other receivables

10

3

3

11,096

10,772

Total non-current assets

 

11,222

11,804

12,528

12,204

Current assets

 

 

 

 

 

Trade and other receivables

10

38

14

37

13

Cash and cash equivalents

 

391

15

211

10

Total current assets

 

429

29

248

23

 

 

 

 

 

 

TOTAL ASSETS

 

11,651

11,833

12,776

12,227

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

11

91

102

84

95

Total current liabilities

 

91

102

84

95

 

 

 

 

 

 

TOTAL LIABILITIES

 

91

102

84

95

 

 

 

 

 

 

NET ASSETS

 

11,560

11,731

12,692

12,132

 

 

 

 

 

 

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

 

 

 

 

 

 

Share capital

12

1,427

892

1,427

892

Share premium

12

18,692

18,178

18,692

18,178

Merger reserve

 

2,001

2,001

2,001

2,001

Foreign exchange reserve

 

 1,411

1,986

-

-

Retained deficit

 

(11,971)

(11,326)

(9,428)

(8,939)

TOTAL EQUITY

 

11,560

11,731

12,692

12,132

 

 

The loss within the parent company financial statements for the year was £489,000 (2017: loss of £330,000)

 

The financial statements were approved by the Board and authorised for issue on 28 December 2018 and signed on its behalf by:

 

 

 

 

 

 

 

 

Nicholas Lyth

Director                                                                                                              

 

Registered number 05350512

(Incorporated in England and Wales)

 

 

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS

For the year ended 30 June 2018

 

 

 

Group

Company

 

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

Cash flows from Operating activities

 

 

 

 

 

Loss for the year before taxation

 

(645)

(341)

(489)

  (330)

Foreign exchange on loans to controlled entities

-

(43)

-

        -

(Increase)/decrease in receivables

 

(24)

3

(24)

        3

Increase/(decrease) in payables

 

(11)

34

(11)

40

Cash used in operations

 

(680)

(347)

(524)

    (287)

Income tax benefit received

 

-

-

-

-

Net cash used in operating activities

(680)

(347)

(524)

     (287)

 

 

 

 

 

 

Cash flows from Investing activities

 

 

 

 

 

Loans to subsidiaries

 

-

-

(324)

(60)

Net cash generated used in investing activities

-

-

(324)

(60)

 

 

 

 

 

 

Cash flows from Financing activities

 

 

 

 

 

Proceeds from issue of shares

 

1,095

-

1,095

-

Costs of issue

 

(46)

-

(46)

-

Net cash inflow from financing

 

1,049

-

1,049

-

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

369

(347)

201

(347)

Cash and cash equivalents at beginning of the year

15

362

10

357

Effect of exchange rate changes on cash and cash equivalents

7

-

-

-

Cash and cash equivalents at 30 June 2018

391

15

211

10

 

 

 

 

 

 

             

 

 

 

 

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 June 2018

 

Attributable to equity holders of the parent

 

 

Share capital

Share

Premium

Merger reserve

Foreign exchange reserve

Retained deficit

Total equity

Group

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 July 2016

892

18,178

2,001

1,449

(10,985)

11,535

loss for the year

-

-

-

-

(341)

(341)

Other comprehensive income

-

-

-

537

-

537

Total comprehensive income

-

-

-

537

(341)

     196 

Balance at 30 June 2017

892

18,178

2,001

1,986

(11,326)

11,731

loss for the year

-

-

-

-

(645)

(645)

Other comprehensive income

-

-

-

(575)

-

(575)

Total comprehensive income

-

-

-

(575)

(645)

(1,220)

Issue of shares

535

560

-

-

-

1,095

Cost of share issue

-

(46)

-

-

-

(46)

Balance at 30 June 2018

1,427

18,692

2,001

1,411

(11,971)

11,560

 

 

 

 

 

 

 

 

 

Company

£'000

£'000

£'000

£'000

£'000

£'000

 

Balance at 1 July 2016

892

18,178

2,001

-

 (8,609)

 12,462

loss for the year

-

-

-

-

   (330)

     (330)

 

Other comprehensive income

-

-

-

-

-

-

 

Total comprehensive income

-

-

-

-

(330)

(330)

 

 

Balance at 30 June 2017

892

18,178

2,001

-

(8,939)

12,132

Loss for the year

-

-

-

-

(489)

(489)

 

Other comprehensive income

-

-

-

-

-

-

 

Total comprehensive income

-

-

-

-

(489)

(489)

 

Issue of shares

535

560

-

-

-

1,095

 

 

Cost of share issue

-

(46)

-

-

-

(46)

 

Balance at 30 June 2018

1,427

18,692

2,001

-

(9,428)

12,692

                             

 

The following describe the nature and purpose of each reserve within owners' equity:

 

Description and Purpose

Amount subscribed for share capital at nominal value

Amount subscribed for share capital in excess of nominal value.

Reserve created on issue of shares on acquisition of subsidiaries in prior years.

Foreign exchange reserve

Cumulative translation differences of net assets of subsidiaries.

Retained deficit

Cumulative net gains and losses recognised in the consolidated statement of comprehensive income

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1.   ACCOUNTING POLICIES

 

GENERAL INFORMATION

 

Altona Energy PLC is a public company which is listed on the Alternative Investment Market ('AIM') and is incorporated and domiciled in the UK, with registered number 05350512.  The Group's and Parent Company's financial statements for the year ended 30 June 2018 were authorised for issue by the Board on 28 December 2018 and the Statements of Financial Position were signed on the Board's behalf by Mr Nicholas Lyth.

 

The principal activity of the Company during the year was that of a holding company for a group engaged in the identification, evaluation, acquisition and development of the Ackaringa coal project in South Australia. Going forward the Company will seek to implement their exclusive licence of pyrolysis technology in Australia and PRC.

 

The principal accounting policies are summarised below. They have been applied consistently throughout the year, unless otherwise stated.

 

BASIS OF PREPARATION

The financial statements are presented in Sterling, being the presentational currency of the Group and the functional and presentational currency of the Company. All values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.

 

These financial statements have been prepared in accordance with IFRS and IFRIC interpretations (IFRS IC) as adopted for use in the European Union (EU), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The financial statements have been prepared on the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

 

GOING CONCERN

The financial statements have been prepared on a going concern basis. The Group's assets are not generating revenues, an operating loss has been reported and an operating loss is expected in the 12 months subsequent to the date of these Financial Statements. Attached to the renewed licenses are minimum spend requirements of AUD 2,240,000. Failure to meet the minimum spend requirements may result in the loss of the licenses or a reduction in the license area. Failure to obtain the licenses will result in impairment of the Company's assets and impact the going concern status. As a result, the Company will need to raise funds to provide additional working capital and fund committed work programmes.

 

Based on the Board's budgets and cash flow forecasts for non-discretionary expenditures, the Directors have a reasonable expectation that the Group and the Company has access to adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements for the year ended 30 June 2018.The Company raises money for exploration and capital projects as and when required. There can be no assurance that the Group's projects will be fully developed in accordance with current plans or completed on time or to budget. Future work on the development of these projects, the levels of production and financial returns arising therefrom may be adversely affected by factors outside the control of the Group.

 

Should the Group be unable to continue trading as a going concern, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities which might arise and to classify non-current assets as current. The Financial Statements have therefore been prepared on a going concern basis and do not include the adjustments that would result if the Group was unable to continue in operation.

 

 

 

The auditors make reference to going concern as a material uncertainty within their audit report.

 

NEW STANDARDS AND INTERPRETATIONS

The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period.

 

 (i) New and amended standards adopted by the Group and Company

 

There were no IFRSs or IFRIC interpretations relevant to the Group or Company that were effective for the first time for the financial year beginning 1 July 2017 that had a material impact on the Group or Company.

 

(ii) New and amended standards and interpretations issued but not yet effective or not yet endorsed for the financial year beginning 1 July 2017 and not early adopted

 

At the date of authorisation of these Financial Statements, the Group and Company have not applied the following new and revised IFRSs that have been issued but are not yet effective and (in some cases) have not yet been endorsed by the EU. The Group and Company intend to adopt these standards, if applicable, when they become effective.

 

Standard / Interpretation

Title

Effective date

 

 

 

IFRS 2 (Amendments)

Classification and Measurement of Share Based Payment Transactions

1 January 2018

IFRS 9

Financial Instruments

1 January 2018

IFRS 15

Revenue from Contracts with Customers

1 January 2018

IFRS 16

Leases

1 January 2019

IFRS 15 (Clarifications)

Revenue from Contracts with Customers

1 January 2018

Annual Improvements

Annual Improvements to IFRS Standard 2014-2016 Cycle

1 January 2018

IFRIC Interpretation 22

Foreign Currency Transactions and Advance Consideration

1 January 2018

IFRS 4 (Amendments)

Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts

1 January 2018

IFRS 9 (Amendments)

Prepayment Features with Negative Compensation

1 January 2019

IFRIC Interpretation 23

Uncertainty over Income Tax Treatments

* 1 January 2019

IAS 28 (Amendments)

Long-Term Interests in Associates and Joint Ventures

* 1 January 2019

Annual Improvements

Annual Improvements to IFRS Standards 2015-2017 Cycle

* 1 January 2019

IAS 19 (Amendments)

Plan Amendment, Curtailment or Settlement

* 1 January 2019

 

 

 

 

* Subject to EU endorsement

 

The Group and Company are evaluating the impact of the new and amended standards above. The Directors do not expect that these new and amended standards will have a material impact on the Group's and Company's results or shareholders' funds.

 

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.
 

 

 

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) as if they formed a single entity.  Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

·      The contractual arrangement with the other vote holders of the investee;

·      Rights arising from other contractual arrangements; and

·      The Group's voting rights and potential voting rights

 

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

 

When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.  Transactions and balances between group companies are eliminated in full.

 

FOREIGN CURRENCIES

The presentation currency of the Group is UK Pounds Sterling. The functional and presentation currency of the Company is UK Pounds Sterling whereas the functional currencies of all other subsidiaries is Australian Dollars.  Transactions entered into by Group entities in currency other than the currency of the primary economic environment in which they operate (the "functional" currency) are recorded at rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. 

On consolidation, the results of the operations are translated into Pounds Sterling at average rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at closing rate are recognised directly in equity (the "foreign exchange reserve").

 

Exchange differences recognised in the statement of comprehensive income of Group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to the foreign exchange reserve if the item is denominated in the functional currency of the Company or the overseas operation concerned.

 

 

 

 

 

 

TAXATION

Current and deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the related tax is also dealt with in equity. Current tax is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Company and its subsidiaries operate.

 

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible

temporary differences can be utilised, except for differences arising on investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

 

Recognition of the deferred tax assets is restricted to those instances where it is probable that a taxable profit will be available against which the difference can be utilised.

 

Deferred tax is calculated based on rates enacted or substantively enacted at the reporting date and expected to apply when the related deferred tax asset is realised or liability settled.

 

INTANGIBLE ASSETS - EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation expenditure in relation to each separate area of interest is recognised as an exploration and evaluation asset in the year in which it is incurred where the following conditions are satisfied:

(i)   the rights to tenure of the area of interest are current; and

(ii)  at least one of the following conditions is also met:

a) the exploration and evaluation expenditure is expected to be recovered through successful development and exploration of the area of interest, or alternatively, by its sale, or

b) Exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. 

 

Exploration and evaluation assets are initially measured at cost and include the acquisition of rights to exploration, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities.  General, administrative and share based payment costs are only included in the measurement of exploration and evaluation costs where they are related directly to exploration and evaluation activities in a particular area of interest. 

 

Exploration and evaluation assets are assessed for impairment when facts or circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.  The recoverable amount of the exploration and evaluation asset (or the cash-generating unit(s) ('CGU') to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any).

 

 

 

 

 

 

FINANCIAL ASSETS

The financial assets currently held by the Group and Company are classified as loans and receivables and cash and cash equivalents.  These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

 

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group and Company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For receivables which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in profit or loss. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Loans and receivables comprise trade and other receivables in the statement of financial position.

 

Cash and cash equivalents include cash in hand and amounts held on short term deposit. Any interest earned is accrued monthly and classified as finance income. Short term deposits comprise deposits made for varying periods of between one day and three months.

 

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

Derecognition

Financial assets

The Group and Company derecognise a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the asset and substantially all the risk and rewards of ownership of the asset to another entity.

 

FINANCIAL LIABILITIES

The Group and Company classify their financial liabilities into one category, being other financial liabilities.

The Group's accounting policy for the other financial liabilities category is as follows:

Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.  All interest and other borrowing costs incurred in connection with the above are expensed as incurred and reported as part of financing costs in profit or loss.

Derecognition

Financial liabilities

The Group and Company derecognise financial liabilities when, and only when, the obligations are discharged, cancelled or they expire.

 

 

 

 

INVESTMENTS IN SUBSIDIARIES

The Company recognises its investments in subsidiaries at cost, less any provision for impairment. The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the acquisition.  It also includes share based payments issued to employees of the Company for services provided to subsidiaries.

 

MERGER RESERVE

The difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange has been treated in accordance with the merger relief provisions of the Companies Act 2006 and accordingly no share premium for such transactions was required to be recognised, resulting in a credit to the merger reserve.

 

SHARE BASED PAYMENTS

The Group issues equity-settled share-based payments to certain employees.  Equity-settled share-based payments are measured at fair value at the date of grant.  The equity-settled share-based payments are expensed to profit or loss or capitalised to investments or intangibles in the statement of financial position over a straight line basis over the vesting period based on the Group's estimate of shares that will eventually vest.

 

Where equity instruments are granted to persons other than employees, the profit or loss is charged with the fair value of goods and services received over a straight line basis over the vesting period based on the Group's estimate of shares that will eventually vest, except where it is in respect to costs associated with the issue of securities, in which case it is charged to the share premium account.

 

SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.  The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions.

 

JOINT ARRANGEMENTS

Joint arrangements are when there is a contractual arrangement that conifers joint control over the relevant activities of the arrangement to the Group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.

 

The Group classifies its interest in joint arrangements as either:

 

·      Joint ventures: where the group has rights to only the net assets of the joint arrangement;

 

·      Joint operations: where the Group has both the rights to assets and obligations for the liabilities of the joint arrangement.

 

In assessing the classification of interests in joint arrangements, the following are considered:

 

·      The structure of the joint arrangement;

·      The legal form of the joint arrangements structure through a separate vehicle;

·      The contractual terms of the joint arrangement agreement; and

·      Any other facts and circumstances (including any other contractual arrangements).

Interests in joint operations are accounted for by accounting for the assets, liabilities, revenues and expenses relating to its involvement in a joint operation in accordance with the relevant IFRSs. 

 

 

 

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The key assumptions concerning the future and other key judgments at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

 

1.   Impairment of intangibles

 

The Group follows the guidance of IFRS 6 to determine whether the exploration and evaluation intangible asset is impaired. This determination requires significant judgement.  The Group's current licences for the Arckaringa Project (the Groups' key asset) were renewed during the year and have an expiration date of June 2019. Attached to the license renewal is minimum expenditure requirements which the Company must meet in order to maintain the full license beyond the expiration date. Failure to meet the minimum spend will result in a loss of 25% of the license area, or a possibility of a third party acquiring the license. As a result management have exercised their judgement on this matter, based on historical experience of renewing licenses in February 2018 and their knowledge of the industry and continue to carry the intangible assets within the financial statements at the value of historic exploration and evaluation costs. Failure to meet minimum spend and renew the licences may result in a full impairment of this asset to profit or loss.

 

 

 

2.   FINANCIAL INSTRUMENTS - RISK MANAGEMENT

The financial instruments were categorised as follows:

Loans and receivables

Other financial liabilities at amortised cost

Total

Group 30 June 2018

£'000

£'000

£'000

Assets as per statement of financial position

 

 

 

Trade and other receivables

38

-

38

Cash and cash equivalents

391

-

391

 

429

-

429

 

 

 

 

Liabilities as per statement of financial position

 

 

 

Trade and other payables

-

91

91

 

-

91

91

 

Group 30 June 2017

Loans and receivables

Other financial liabilities at amortised cost

Total

Assets as per statement of financial position

£'000

£'000

£'000

Trade and other receivables

12

-

12

Cash and cash equivalents

15

-

15

 

27

-

27

 

 

 

 

Liabilities as per statement of financial position

 

 

 

Trade and other payables

-

102

102

 

-

102

102

 

 

 

Company 30 June 2018

Loans and receivables

Other financial liabilities at amortised cost

Total

Assets as per statement of financial position

£'000

£'000

£'000

Trade and other receivables

37

-

37

Cash and cash equivalents

211

-

211

 

248

-

248

 

 

 

 

Liabilities as per statement of financial position

 

 

 

Trade and other payables

-

84

84

 

-

84

84

 

 

 

Company 30 June 2017

Loans and receivables

Other financial liabilities at amortised cost

Total

Assets as per statement of financial position

£'000

£'000

£'000

Trade and other receivables

9

-

9

Cash and cash equivalents

                10

-

10

 

19

-

19

 

 

 

 

Liabilities as per statement of financial position

 

 

 

Trade and other payables

-

95

95

 

-

95

95

 

The Group's financial instruments comprise cash and sundry receivables and payables that arise directly from its operations. 

 

 

 

 

 

The main risks arising from financial instruments are credit risk, liquidity risk and currency risk.  The Directors review and agree policies for managing these risks and these are summarised below.  There have been no substantial changes to the Group's or Company's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

 

There is no significant difference between the carrying value and fair value of receivables, cash and cash equivalents and payables.

 

Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss.  The Group has adopted a policy of only dealing with creditworthy counterparties, as assessed by the Directors using relevant available information.

 

Credit risk also arises on cash and cash equivalents and deposits with banks and financial institutions.  The Group's and Company's cash deposits are only held in banks and financial institutions which are independently rated with a minimum credit agency rating of A.

 

There were no bad debts recognised during the year and there is no such provision required at the reporting date.

 

Liquidity risk

Liquidity risk arises from the management of working capital. It is the risk that the Group or Company will encounter difficulty in meeting its financial obligations as they fall due. Short term payables are classified as those payables that are due within 30 days.  The Group's and Company's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain liquid cash balances (or agreed facilities) to meet expected requirements for a period of at least 45 days.

 

Currency risk

The functional currencies of the companies in the Group are Pounds Sterling and Australian Dollars.  The Group does not hedge against the effects of movements in exchange rates.  These risks are monitored by the Board on a regular basis. 

 

The following table discloses the year end rates applied by the Group for the purposes of producing the financial statements:

 

Foreign currency units to £1.00 GBP

 

Australian Dollar

At 30 June 2018

 

1.79

At 30 June 2017

 

1.69

 

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

 

 

Liabilities

Assets

 

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

Australian Dollar

 

7

8

181

7

 

The impact of a 20% (2017: 20%) fluctuation in the value of the Australia Dollar would result in net translation gains or losses of £218,880 (2017: £197,187) movement in profit or loss and net assets of the Group. 

 

 

 

 

The only monetary asset the Company has is the intercompany loan.  The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

 

 

 

Assets

 

 

 

 

2018

£'000

2017

£'000

Australian Dollar

 

 

 

11,219

11,801

 

A 20% (2017: 20%) fluctuation in the value of the Australian Dollar would result in a positive or negative movement in the Foreign Exchange Reserve of £2,244,000 (2017: £2,360,000) in relation to the monetary assets above.

 

Interest rate risk

The Group and Company finance operations through the issue of equity share capital. 

 

The Group and Company manages the interest rate risk associated with the Group and Company cash assets by ensuring that interest rates are as favourable as possible, whether this is through investment in floating or fixed interest rate deposits, whilst managing the access the Group and Company requires to the funds for working capital purposes.

 

The interest rate profile of the Group's cash and cash equivalents was as follows:

 

 

 

 

30 June 2018

 

 

Pound Sterling

£'000

Australian Dollar

£'000

Total

 

£'000

Cash at bank floating interest rate

 

 

211

180

391

 

 

 

 

30 June 2017

 

 

Pound Sterling

£'000

Australian Dollar

£'000

Total

 

£'000

Cash at bank floating interest rate

 

 

10

5

15

 

 

At the reporting date, cash at bank floating interest rate is accruing weighted average interest of 0.05% (2017: 0.05%) As required by IFRS 7, the Group has estimated the interest rate sensitivity on year end balances and determined that a two percentage point increase or decrease in the interest rate earned on floating rate deposits would have caused a corresponding increase or decrease in net income in the amount of £7,820 (2017: £300).

 

Capital Management

The Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained losses as well as the reserves (consisting of the foreign currency translation reserve and merger reserve).

 

The Group's objective when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders.

 

The Company meets its capital needs by equity financing. The Group sets the amount of capital it requires to fund the Group's project evaluation costs and administration expenses. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
 

 

 

The Company and Group do not have any derivative instruments or hedging instruments. It has been determined that a sensitivity analysis will not be representative of the Company's and Group's position in relation to market risk and therefore, such an analysis has not been undertaken.

 

Fair values

The fair values of the Group and Company's financial instruments approximates to their carrying value.

 

3.    REVENUE AND SEGMENTAL INFORMATION

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision‑maker.  The chief operating decision‑maker, who is responsible for allocating resources and assessing performance of the operating segment and that make strategic decisions, has been identified as the Board of Directors.  The Group had no revenue during the period.

 

During the year ended 30 June 2018 the Group operated in one segment, being the evaluation of the Arckaringa coal project in South Australia.  The Parent Company serves as an administrative head office and is based in the United Kingdom.  During the year ended 30 June 2018 the Group's operations spanned Australia and the United Kingdom.

 

 

Segment result

 

Segment result

 

 

Continuing operations

 

 

2018

£'000

2017

£'000

 

 

156

10

Administration and Corporate (United Kingdom)

489

330

 

 

 

645

340

 

 

-

-

 

 

645

340

 

 

-

  -

 

 

645

340

 

 

Segment assets and liabilities

 

Non-Current Assets

Non-Current Liabilities

 

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

11,222

11,804

-

-

-

-

-

-

11,222

11,804

-

-

 

Total Assets

Total Liabilities

 

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

11,402

11,810

7

7

249

23

84

95

11,651

11,833

91

102

 

 

 

4.    PROFIT/LOSS FROM OPERATIONS

 

Group

 

 

2018

£'000

2017

£'000

 

 

 

 

 

 

 

 

 

 

18

16

 

 

4

4

 

 

268

213

 

 

 

5.      STAFF COSTS (INCLUDING DIRECTORS)

 

 

Group

Company

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

261

210

261

210

Pensions

1

-

1

-

Social security costs

6

3

6

3

268

213

268

213

 

The Group and Company averaged 5 employees, including Directors, during the year ended 30 June 2018 (2017: 6 employees). Directors have been assessed as the only key management of the Group.

 

 

Short term benefits

 

Pension payments

National insurance

Total

 

2018

2017

 

£'000

£'000

£'000

£'000

£'000

Current Directors:

 

 

 

 

 

Qinfu Zhang

102

-

-

102

90

Phillip Sutherland

35

-

-

35

24

Nicholas Lyth

54

1

6

61

27

Chi Ma

28

-

-

28

24

Henry Kloepper (appointed 3 November 2017)

17

-

-

17

-

Total Key Management 2018

236

1

6

243

-

Total Key Management 2017

175

-

3

-

178

 

The total amount payable to the highest paid director in respect of emoluments was £102,000 (2017: £90,000).  No Directors exercised any share options during the year. 

 

 

 

 

 

6.         EARNINGS PER SHARE

 

The loss for the year attributed to shareholders is £645,000 (2017: loss £341,000).

 

This is divided by the weighted average number of Ordinary shares outstanding calculated to be 1.023 million (2017: 0.892 million) to give a basic loss per share of 63.05 pence (2017: basic loss per share of 38.23 pence).

 

In the current and prior year there were no potentially dilutive ordinary shares at the year end because the share price at year end was below the strike price of the potentially dilutive options and warrants.  The potential future share issues that may dilute the loss per share relate to options in issue disclosed at note 13.

 

On 18 October 2018, the Company issued an application to AIM to carry out a 1:1000 share consolidation. The Earnings Per Share calculation incorporates this consolidation.

 

7.           TAX

 

 

Group

 

 

 

 

2018

£'000

2017

£'000

 

Current taxation

 

 

 

 

 

Tax credit

Deferred taxation

 

 

-

-

-

-

 

Total tax credit

 

 

-

-

 

 

 

 

 

 

 

Factors affecting the tax charge for the year

 

 

 

 

Loss on ordinary activities before tax

 

 

(645)

(341)

 

 

 

 

 

 

 

Loss on ordinary activities at the Group standard rate of 19% (2017: 20.09%)

 

 

(123)

(69)

 

Effects of:

 

 

 

 

 

Non-deductible expenses

 

 

-

-

 

Difference in overseas tax rates

 

 

-

-

 

Tax concession (research & development)

 

 

-

-

 

Tax losses (utilised)/ carried forward

 

 

123

69

 

Total tax credit for the year

 

 

-

-

 

 

Unprovided deferred tax asset:

 

 

 

 

Group tax losses carried forward of £19,854,000 (2017: £19,209,000) multiplied by the standard rate of corporation tax 17% (2017: 20%) when it is probable that a taxable profit will be available in the foreseeable future, but in view of the uncertainty as to future profits, no deferred tax asset has been recognised as at 30 June 2018 (30 June 2017: nil) due to uncertainty as to when profits will be generated.

 

 

3,375

 

 

3,841

 

Changes in tax rates and factors affecting the future tax charge

Further reductions to the UK corporation tac rates were substantively enacted as part of the Finance Bill 2017 on 7 September 2017. These reduce the standard rate to 17% from 1 April 2020. The unprovided deferred tax asset reflects this rate.

 

 

 

8.           INTANGIBLE ASSETS                                                                    

 

 

Group

 

 

 

2018

£'000

2017

£'000

Exploration and evaluation

 

 

 

 

Cost

 

 

 

 

At beginning of year

 

 

11,801

11,221

Currency translation adjustment

 

 

(582)

580

Carrying value at 30 June

 

 

11,219

11,801

 

The Group's interest in its Arckaringa Coal Project tenements is held within a 100% owned entity called Arckaringa Coal Chemical Joint Venture Company Pty Limited ("Joint venture company").

 

During the year under review, the joint venture company has not issued shares to the joint venture partners as these partners have not met their capital contribution requirements obligations.  Accordingly, at the year-end Altona continued to own 100% of the shares in the joint venture Company.  Because the shares had not yet been issued to partners as at 30 June 2018, management consider that the appropriate accounting is to treat the joint arrangement as a joint operation.

 

The licences held by the Group were renewed during the year and have an expiry date of June 2019. The minimum expenditure targets for the licences total £2,240,000. Whilst the directors have a work plan in place in respect of the minimum spend requirements, there is no guarantee that this will be met. In the event that they are not met, upon expiry of the licenses, they are available for acquisition from third parties who will meet the minimum spend. However, the directors deem this to be unlikely. It is expected, if spend commitments were not met, that the Group will be able to retain the licenses however at a 25% reduction of the expanse.

 

The Company has recently undertaken a new strategy, starting with the commissioning of the further coal studies to utilise value of the licences, which further supports the Directors reason for not recognising any impairment in the year.   

  

9.             INVESTMENTS IN SUBSIDIARIES

 

 

Company

 

 

 

 

2018

£'000

2017

£'000

Cost

Investments in subsidiaries - opening and closing balance

 

 

1,432

1,432

         

 

 

Subsidiaries of Altona Energy Plc

 

Registered office

 

Holding

 

Nature of Business

 

 

 

2018

%

2017

%

 

Direct

 

 

 

 

Altona Australia Pty Ltd

35 Vincent Boulevard, Flag-staff Hill, SA5159, Australia

100

100

Dormant holding Company

 

 

 

 

 

Indirect

 

 

 

 

Arckaringa Energy Pty Ltd

35 Vincent Boulevard, Flag-staff Hill SA5159, Australia

100

100

Prior year evaluation of the Arckaringa Project

Arckaringa Coal Chemical Joint Venture Co Pty Ltd

18 Coke Street, Norwood SA 5067, Australia

100

100

Current year evaluation of the Arckaringa Project

               

 

 

 

10.          TRADE AND OTHER RECEIVABLES

 

Group

Company

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

Current

 

 

 

 

Taxes & Social security receivable

10

5

28

4

Prepayments and other receivables (i)

28

9

9

9

 

38

14

37

13

 

Non-current

 

 

 

Loans due from Group companies (ii)

-

-

11,096

10,772

Tenement bond

3

3

-

-

 

3

3

11,096

10,772

 

(i)  Other receivables are non-interest bearing and generally repayable between 30-60 days. Included within other receivables is an amount for rent deposit which is refundable upon expiry of the lease.

(ii)  The loans to wholly owned subsidiaries are non-interest bearing and are repayable on demand, however payment is not anticipated to be within one year.

 

The other receivables remain within their contractual maturity at 30 June 2018 (30 June 2017).

 

11.            TRADE AND OTHER PAYABLES

 

Group

Company

 

2018

£'000

2017

£'000

2018

£'000

2017

£'000

Trade payables

54

66

54

66

Accruals and other payables

37

36

30

29

 

91

102

84

95

 

Trade and other payables are non-interest bearing and are normally settled on terms of 30 days from month end.  The trade and other payables remain within their contractual maturity at 30 June 2018 and 30 June 2017.

 

 

12.             SHARE CAPITAL

 

Group

Company

Allotted, called up and fully paid

2018

£'000

2017

£'000

2018

£'000

2017

£'000

2017: 891,956,853 ordinary shares of 0.1p each

-

892

-

892

1,411,956,853 deferred shares of 0.09p each (2017: nil)

1,271

-

1,271

-

1,558,956,853 ordinary shares of 0.01p each (2017: nil)

       156

     -

       156

     -

 

 

1,427

892

1,427

892

 

See note 17 for details of the share capital post year end.

 

 

 

 

 

 

13.        SHARE-BASED PAYMENTS

The Company periodically grants share options to employees, consultants and Directors, as approved by the Board.  At 30 June 2018 and 30 June 2017, the following share options were outstanding in respect of the ordinary shares:

Year ended 30 June 2018

Grant Date

Expiry Date

Number of Options Outstanding at beginning of the year

Issued in Year

Forfeited / Expired / Cancelled

Exercised in Year

Number of Options Outstanding at end of the year

Exercise Price per Option

28.01.13

28.01.18

4,515,000

-

4,515,000

-

-

1.50p1

01.04.16

01.04.21

6,500,000

-

-

-

6,500,000

1.50p2

01.04.16

01.04.21

6,500,000

-

-

-

6,500,000

1.50p2

21.07.17

21.07.22

-

180,000,0000

-

-

180,000,000

0.50p3

21.07.17

21.07.22

-

90,000,000

-

-

90,000,000

0.50p4

 

 

17,515,000

-

4,515,000

-

13,000,000

 

Year ended 30 June 2017

Grant Date

Expiry Date

Number of Options Outstanding at beginning of the year

Issued in Year

Forfeited / Expired / Cancelled

Exercised in Year

Number of Options Outstanding at end of the year

Exercise Price per Option

28.01.13

28.01.18

4,515,000

-

-

-

4,515,000

1.50p1

 

01.04.16

01.04.21

6,500,000

-

-

-

6,500,000

1.50p2

 

01.04.16

01.04.21

6,500,000

-

-

-

6,500,000

1.50p2

 

 

 

20,515,000

-

-

-

17,515,000

 

 

                               

 

1 - no vesting conditions or are fully vested at year end.

         2 - The first 6,500,000 options vest on the first anniversary after the date of grant and the second 6,500,000 vests on the second anniversary of the date of grant.

         3 - One third vests on the date of grant, one third on the first anniversary of the grant and one third on the second anniversary of the grant. The issues relate to Tranche A Options.

4 - Half vest upon commencement of a drilling programme at Arckaringa. Half vest upon completion of a pre-feasibility study assessing a defined target area at Arckaringa for a potential mining development.

 

The weighted average contractual life of share options outstanding at the end of the period was 3.5 years (2017: 3.75 years).

 

The highest and lowest market price of the Company's shares during the year was 0.7p and 0.15p respectively (2017: 0.82p and 0.4p).  The share price at year end was 0.30p (2017: 0.42p).

 

No charge has been recognised in the statement of consolidated comprehensive income on the basis of materiality.

 

14.            COMMITMENTS AND CONTINGENT LIABILITIES

 

As at 30 June 2018, the Group had the following material exploration commitments:

 

The Group has three exploration tenements in South Australia. The exploration commitments relating to EL 5677 Wintinna, to EL 5676 Westfield and to EL 5677 Murloocoppie. These exploration commitments are held by the joint venture company. These licenses expire in June 2019.  Under its joint venture agreement the Group expects that the exploration commitments

 

 

of the licences will continue to be met by the joint venture company in the coming financial year. The total commitment under the new licenses is AUD2,240,000.

 

15.       RELATED PARTY TRANSACTIONS

The key management personnel are considered to be the Directors. Details of their remuneration are included in Note 5 to the financial statements.

 

16.       CONTROLLING PARTY

The directors consider that there is no controlling party.

 

17.       POST REPORTING DATE EVENTS

The Company previously filed a defence to a claim brought by a former director, who claims £225,000 plus interest and costs. The claim concerned a settlement agreement entered into in 2014.

 

On 16 August 2018, the claim was settled and the Company was required to pay £26,000 to the former Director in respect of the claim.

 

On 18 October 2018, the Company issued an application to AIM to carry out a 1:1000 share consolidation. At this date, the share capital of the Company consisted of 1,558,956 Ordinary Shares of 10p each.


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