drilling, development
and investment in the
United Kingdom hydrocarbon sector
UNION JACK OIL plc
Annual Report and
Financial Statements
2013
Directors, Officers and Advisers
DIRECTORS
David Bramhill
Executive Chairman
Joseph O’Farrell
Executive
Martin Durham
Non-Executive
Raymond Godson
Non-Executive
COMPANY OFFICE
6 Charlotte Street,
Bath BA1 2NE,
England
Telephone: +44 (0) 1225 428139
Fax:
+44 (0) 1225 428140
Email: info@unionjackoil.com
Web: www.unionjackoil.com
REGISTERED NUMBER
07497220
SECRETARY AND
REGISTERED OFFICE
Brian Marshall
6 Charlotte Street,
Bath BA1 2NE,
England
NOMINATED ADvISER
Shore Capital and Corporate Limited
Bond Street House,
14 Clifford Street,
London W1S 4JU,
England
REGISTRARS
JOINT BROKERS
Computershare Investor Services PLC
The Pavilions,
Bridgwater Road,
Bristol BS13 8AE,
England
Shore Capital Stockbrokers Limited
Bond Street House,
14 Clifford Street,
London W1S 4JU,
England
Northland Capital Partners Limited
131 Finsbury Pavement,
London EC2A 1NT ,
England
PUBLIC RELATIONS CONSULTANTS
Yellow Jersey PR Limited
South Building,
Upper Farm,
Wootton St. Lawrence,
Basingstoke RG23 8PE,
England
AUDITOR
Deloitte LLP
3 Rivergate,
Temple Quay,
Bristol BS1 6GD,
England
SOLICITORS
Osborne Clarke
2 Temple Back East,
Temple Quay,
Bristol BS1 6EG,
England
BANKERS
Royal Bank of Scotland plc
8-9 Quiet Street,
Bath BA1 2JN,
England
www.unionjackoil.com
business and strategy
Governance
Financial Statements
Annual General Meeting
1
Contents
business and strategy
Chairman's Statement
Strategic Report
Review of Operations
governance
Directors' Report
Corporate Governance Report
Directors' Responsibilities Statement
Independent Auditor's Report
on the Financial Statements
Financial statements
Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flows
Principal Accounting Policies
Notes to the Financial Statements
annual general meeting
Notice of Annual General Meeting
2
4
6
10
12
13
14
15
16
17
18
19
20
24
35
Union Jack Oil plc is an onshore oil
and gas exploration company with
a focus on drilling, development and
investment in the United Kingdom
hydrocarbon sector. The issued
share capital is traded on the AIM
Market of the London Stock Exchange
(Ticker: UJO).
Our strategy is the appraisal
and exploitation of the assets
currently owned. Simultaneous
with this process, the Company’s
management expects to continue to
use its expertise to acquire further
licence interests over areas where
there is a short lead time between
the acquisition of the interest and
either exploration drilling or initial
production from any oil or gas fields
that may be discovered.
Summary of Licence inTereSTS
heLd by union Jack oiL plc
burton on the Wolds
PEDL201
Wressle
PEDL180
biscathorpe
PEDL253
north Kelsey
PEDL241
10.0%
8.33%
10.0%
10.0%
2
Union Jack oil plc
Annual Report and
Financial Statements
2013
Chairman's Statement
i am pleased to present to the shareholders of Union Jack oil plc ("Union
Jack" or "the company"), the annual report and Financial statements
for the year ended 31 december 2013.
The Board is of the opinion that the United Kingdom
onshore hydrocarbon arena offers excellent value
presenting the opportunity to participate in late stage
projects in a reasonably low cost environment where
commercial discoveries can be brought onstream within
a short timeframe.
The Company effectively commenced trading in February
2013 with the acquisition of a 10% interest in PEDL201,
containing the drill ready Burton on the Wolds Prospect.
Following this initial acquisition, Union Jack acquired an
8.33% interest in PEDL180 containing the Wressle Prospect
in May 2013.
The intention of the operator, Egdon Resources U.K. Limited,
a subsidiary of AIM listed Egdon Resources plc, is to drill
both the above mentioned conventional wells back to back
commencing in June 2014. Union Jack has a firm commitment
to participate in the drilling of these two prospects.
In addition, the Company holds options over 10% of
PEDL253, containing the Biscathorpe Prospect and 10%
of PEDL241, containing the North Kelsey Prospect.
A comprehensive summary of our licence interests can be
found in the Review of Operations section of this report.
Corporate and Financial
The highlight of the corporate year was the Company’s
admission to trading on the AIM Market of the London Stock
Exchange in July 2013.
The admission was accompanied by a placing and subscription
raising gross proceeds of £909,500.
This funding was preceded by a placing of £562,250 before
expenses in February 2013.
These funds will be applied to the drilling of the Burton on the
Wolds -1 and Wressle-1 wells and provide ongoing working
capital for Union Jack.
Post year end, the Company raised £650,000 before
expenses during March 2014.
The majority of the Company’s funds are currently invested
in deposit accounts with a high street bank. In the current
environment of low interest rates we are pleased to receive
a competitive return on shareholder funds without placing
capital at risk.
The last two placings are Venture Capital Trust (VCT) and
Enterprise Investment Scheme (EIS) qualifying, with the
Company having been granted conditional clearance by
HMRC. The key conditions are the commencement of
production at one of the licence interests held within two
years of admission to AIM.
On admission to AIM in July 2013, William O ’ Dea, non-
executive director stepped down from the Board. An
appreciative thank you is given to Willie for his efforts and
support to Union Jack during its formation. A welcome is also
given to Ray Godson who joined the Board on admission.
www.unionjackoil.com
business and strategy
Governance
Financial Statements
Annual General Meeting
3
The highlight of the corporate
year was the Company's
admission to trading on the
AIM Market of the London
Stock Exchange during
July 2013.
Summary
The past year has been one of operational and corporate
growth for Union Jack.
In the opinion of the Board, the building blocks have been
added with the acquisition of interests in four, high potential
licences, two of which will be exploited by the drilling of
conventional wells at Burton on the Wolds and Wressle during
the coming months.
In addition, the directors plan to expand the Company’s asset
portfolio.
I hope to report on positive drill results from at least one of
our exploration efforts in the near future.
The future of Union Jack remains bright.
David Bramhill
Executive Chairman
29 April 2014
OPERATIONAL HIGHLIGHTS
w Acquisition of material interests and options
in four onshore Petroleum Exploration and
Development Licences all containing drill ready
prospects
w Progress made towards delivering on strategy
to appraise and exploit the acquired assets
w The expected commencement of a conventional
two well drilling programme comprising
Wressle-1 and Burton on the Wolds-1 in
June 2014
FINANCIAL HIGHLIGHTS
w Admission to trading on AIM in July 2013
w Placing and Subscription raising £909,500
before expenses in July 2013
4
Union Jack oil plc
Annual Report and
Financial Statements
2013
Strategic Report
for the year ended 31 December 2013
Strategy
Our strategy is the appraisal and exploitation of the assets
currently owned. Simultaneous with this process, the
Company’s management expects to continue to use its
expertise to acquire further licence interests over areas
where there is a short lead time between the acquisition
of the interest and either exploration drilling or initial
production from any oil or gas fields that may be discovered.
Key Performance Indicators
The Company has made good progress during the year ended
31 December 2013 in preparation for due diligence and
research in identifying suitable additions to its hydrocarbon
portfolio and sources of finance for their acquisition.
Key financial performance indicators will be determined
during 2014, when exploration drilling commences.
Business Review
Union Jack Oil plc is a UK registered company, focused on
the exploration for, and future development of, hydrocarbon
projects.
A review of the Company’s operations during the year ended
31 December 2013 and subsequently to the date of this
report is contained in the Chairman’s Statement and Review
of Operations.
The loss for the year amounted to £708,920 (period ended
31 December 2012: £142,573).
The directors do not recommend the payment of a dividend
(period ended 31 December 2012: nil).
A placing raising £562,250 before expenses was completed
in February 2013 to raise working capital for the Company.
The whole of the issued share capital of the Company was
admitted to AIM on 30 July 2013 accompanied by a placing
and subscription raising £909,500 before expenses. After
31 December 2013 the Company raised further capital as
disclosed in note 20 to these financial statements.
Future Developments
The directors intend to continue their involvement with
the licences as disclosed in the Review of Operations. They
continue to seek further acquisition opportunities in relation
to onshore oil and gas exploration and development.
Principal Risks and Uncertainties
Although the directors have extensive experience in the
acquisition and development of assets similar to those held
by the Company, as with all companies within the energy
sector the business of oil and gas development involves
varying degrees of risk. These risks include operating
reliance on third parties, the ability to exploit discoveries
and the risk of cost overruns.
There are also specific political, regulatory and licensing
risks attached to various projects as well as issues of
commerciality, environmental, economic, competition,
reliance on key personnel, contractor and judicial factors.
The directors believe that they have mitigated risks as far as
reasonably practicable – by maintaining strong relationships
with project operators, implementing internal controls and
continually reviewing and seeking to improve such controls
as well as business processes and procedures.
Financial Risk Management Objectives and Policies
The Company’s activities expose it to a number of financial
risks including credit risk, cash flow risk and liquidity risk.
The use of financial derivatives is governed by the Company’s
policies approved by the board of directors, which provide
written principles on the use of financial derivatives to
manage these risks. The Company does not use derivative
financial instruments for speculative purposes.
www.unionjackoil.com
business and strategy
Governance
Financial Statements
Annual General Meeting
5
Cash Flow Risk
Approval of the Board
This Strategic Report contains certain forward - looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration
and production business. While the directors believe the
expectation reflected within the Annual Report to be
reasonable in light of the information available up to the
time of their approval of this report, the actual outcome
may be materially different owing to factors either beyond
the Company’s control or otherwise within the Company’s
control, for example owing to a change of plan or strategy.
Accordingly, no reliance may be placed on the forward –
looking statements.
On behalf of the Board
David Bramhill
Chairman
29 April 2014
During the year, the Company’s activities did not expose it to
financial risks of changes in foreign currency exchange rates.
Credit Risk
The Company’s principal financial assets are bank balances
and cash and other receivables. The credit risk on liquid
funds is limited because the counterparty is a bank with
high credit-rating.
Liquidity Risk
In order to maintain liquidity to ensure that sufficient
funds are available for ongoing operations and future
developments, the Company uses its existing cash funds.
Going Concern
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Chairman’s Statement, Review
of Operations and the Strategic Report. The directors’
forecasts demonstrate that the Company will meet its day
to day working capital and share of estimated drilling costs
over the forecast period from the cash held on deposit. The
principal risk to the Company’s working capital position
is drilling cost overruns. The Company has sufficient
funding to meet planned drilling expenditures and a level
of contingency. Should a greater cost overrun arise the
Company would seek to raise additional funds in order not
to default on its commitments and thus risk forfeiture of
the individual licence concerned. Taking account of these
risks, sensitised forecasts show that the Company should be
able to operate within the level of funds currently held. The
directors have a reasonable expectation that the Company
has 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 financial
statements.
6
Union Jack oil plc
Annual Report and
Financial Statements
2013
Review of Operations
PEDL201
burton on
the Wolds
United Kingdom
in February 2013, Union
Jack entered into an
agreement with egdon
resources U.K. limited
("egdon resources"),
a subsidiary of aim listed
egdon resources plc
("egdon"), the licence
operator, and privately
controlled celtique
energie petroleum limited
("celtique energie") to
acquire a 10% interest
in pedl201, located in
the onshore UK east
midlands province.
PedL201
union Jack oil 10%
PEDL201 contains the Burton on the Wolds Prospect, a four way dip closed,
footwall structure on the Hoton Fault system.
The Burton on the Wolds Prospect is located on the southern boundary of the
Widmerpool Gulf, a geological basin with proven oil generation and on trend
with the Rempstone and Long Clawson producing oil fields.
Having been mapped from proprietary 2D seismic data which was acquired by
Egdon during 2011, the geological evaluation has highlighted two stratigraphically
independent Carboniferous targets within the prospect. The shallower target, the
Rempstone Sandstone, is productive at a nearby oil field. In addition, a seismic
anomaly, possibly indicative of a carbonate reef, underlies the Rempstone
Sandstone and provides the deeper secondary target.
The subsurface target location to test the prospect has been agreed and in late
July 2013 planning consent was granted by Leicestershire County Council for the
drilling of an exploratory borehole, Burton on the Wolds-1.
The planned well will be drilled to a total depth of approximately 1,000 metres
and has been designed to evaluate the primary and secondary reservoir objectives.
This well is planned for drilling during 2014 and has been designed to intersect
both targets in a structurally favourable position near the crest of the structure.
The total mean Prospective Resource volumes for the two target objectives,
as calculated by Molten Limited (“Molten”), the company who produced the
Competent Persons Report in respect of Union Jack's AIM admission, are
estimated to be 4.83 million barrels of oil.
The interests in PEDL201 are held by:
Egdon Resources (operator)
Celtique Energie
Terrain Energy Limited
Corfe Energy Limited
Union Jack Oil
32.5%
32.5%
12.5%
12.5%
10.0%
key deVeLoPmenTS
w The total mean Prospective
Resource volumes for the
two target objectives,
as calculated by Molten,
are estimated to be 4.83
million barrels of oil.
w Drilling is planned for
2014
www.unionjackoil.com
business and strategy
Governance
Financial Statements
Annual General Meeting
7
PEDL180 is located in Lincolnshire, on the western margin of the Humber Basin and is on
trend with the producing Crosby Warren oil field and the Brigg-1 oil discovery, situated
to the immediate northwest and southeast of the licence respectively. These discoveries
contain oil in various sandstone reservoirs within the Upper Carboniferous succession,
highlighting the relatively low risk potential for one or more sand units to be hydrocarbon
bearing over the Wressle structure.
A surface location for the well has been identified, a lease agreed with the landowner
and planning consent was granted by the North Lincolnshire Council in June 2013 for the
drilling of an exploratory borehole, Wressle-1.
The planned well will be drilled as a deviated well to a total depth of approximately 2,300
metres with a maximum offset of 1,250 metres and has been designed to intersect all of
the prospective sandstone reservoirs in a structurally favourable position near the crest
of the structure. This well is planned to be drilled during 2014, as part of Egdon Resources’
drilling programme which will also include the Burton on the Wolds-1 well.
Under the terms of the agreement, should the Wressle-1 well be successful and prove the
existence of an economically developable hydrocarbon accumulation that extends into the
adjacent PEDL 182 then Union Jack has the option to require Egdon Resources to assign, at
no extra cost, an 8.33% interest in that part of the designated field falling within PEDL182.
The Company’s interest in PEDL180 is subject to a 0.648% net profit interest (based on
Petroleum income less certain deductible expenditure) in favour of Egdon (equivalent to
7.5% of the Company’s interest). Following this event the Company will hold 7.682% of
PEDL180.
The total mean Prospective Resource volume at Wressle, as calculated by Molten,
is estimated to be 2.13 million barrels of oil.
The interests in PEDL180 are held by:
Egdon Resources (operator)
Celtique Energie
Europa Oil & Gas Limited
Union Jack Oil
25.00%
33.33%
33.34%
8.33%
PEDL180
Wressle
United Kingdom
in may 2013 Union
Jack entered into an
agreement with egdon
resources, the licence
operator, to acquire
an 8.33% interest in
pedl180 containing
the Wressle prospect.
PedL180
union Jack oil 8.33%
key deVeLoPmenTS
w The total mean
Prospective Resource
volume at Wressle, as
calculated by Molten,
is estimated to be 2.13
million barrels of oil.
w Drilling is planned for
2014
8
Union Jack oil plc
Annual Report and
Financial Statements
2013
Review of Operations
PEDL253
biscathorpe
United Kingdom
in march 2013 Union Jack
entered into an agreement
with egdon resources,
the licence operator,
and montrose industries
limited ("montrose"), to
acquire a 10% interest in
pedl253 containing the
biscathorpe prospect.
PedL253
union Jack oil 10%
PEDL253 is located within the proven hydrocarbon fairway of the Humber Basin,
on trend with the Saltfleetby gas field and the Keddington oil field which produces
oil from the Upper Carboniferous Westphalian aged reservoir sandstones.
The Biscathorpe Prospect is a well defined four way dip closed structure mapped
from recently reprocessed 3D seismic. The Biscathorpe structure was originally
drilled and tested by BP in 1987 with the Biscathorpe-1 well which encountered
a 1.2 metre thick, oil bearing sandstone of Lower Westphalian age within a
24 metre gross sequence. Biscathorpe-2 will be directed towards a potentially
thicker sand development within the structural closure of the trap.
A subsurface target location to evaluate the exploration potential of the
Biscathorpe Prospect has been defined and a surface drilling location has been
identified from which a vertical well to the depth of 2,100 metres can be drilled
to test the primary subsurface objective. Drilling of the Biscathorpe-2 well is
expected to commence following receipt of planning and other consents.
A royalty agreement is in place in respect of the Company’s interest in PEDL253
whereby with effect of first production of oil or gas a beneficial interest of 0.6%
will be assigned to Charnia Resources Limited. Following this event the Company
will hold 9.4% of PEDL253.
The Company’s interest is currently unfunded. An option to withdraw from the
licence interest is in place with Egdon and Montrose.
The total mean Prospective Resource volume for the main reservoir objective,
as calculated by Molten, is estimated to be 11.73 million barrels of oil. Further
exploration upside is recognised from the 3D seismic and well data which suggests
the presence of a pinchout providing a stratigraphic component to the trap.
The interests in PEDL253 are held by:
Egdon Resources (operator)
Montrose
Union Jack Oil
54.0%
36.0%
10.0%
key deVeLoPmenTS
w The total mean
Prospective Resource
volume for the main
reservoir objective, as
calculated by Molten, is
estimated to be 11.73
million barrels of oil
www.unionjackoil.com
business and strategy
Governance
Financial Statements
Annual General Meeting
9
PEDL241
north Kelsey
United Kingdom
in march 2013 Union Jack
entered into an agreement
with egdon resources, the
licence operator, to acquire
a 10% interest in pedl241
containing the north Kelsey
prospect.
PEDL241 is located within the proven hydrocarbon fairway of the Humberside
Platform and contains the North Kelsey Prospect.
This prospect is a well defined tilted fault block mapped from 3D seismic. Based
on offset well data, potential exists for up to four separate stacked reservoir
sequences to be hydrocarbon bearing. The nearby Crosby Warren oil field and
the Brigg oil discovery are productive from Upper Carboniferous Namurian aged
reservoirs.
The subsurface target location to evaluate the exploration of the North Kelsey
Prospect has been defined and a surface drilling location has been identified
from which a vertical well can be drilled.
The Company’s interest in PEDL241 is currently unfunded. An option to withdraw
from this licence interest is in place with Egdon.
The total mean Prospective Resource volume for the four reservoir objectives,
as calculated by Molten, is estimated to be 9.91 million barrels of oil.
The interests in PEDL241 are held by:
Egdon Resources (operator)
Celtique Energie
Union Jack Oil
40.0%
50.0%
10.0%
PedL241
union Jack oil 10%
key deVeLoPmenTS
w The total mean
Prospective Resource
volume for the four
reservoir objectives,
as calculated by Molten,
is estimated to be 9.91
million barrels of oil
10
Union Jack oil plc
Annual Report and
Financial Statements
2013
Directors' Report
for the year ended 31 December 2013
The directors present their report together with the financial
statements for the year ended 31 December 2013.
Directors
The directors in office at the end of the year, and their
interests in the shares of the Company as at 1 January 2013
and 31 December 2013, were as shown in the table below.
ordinary shares
31 december
2013
1 January
2013
44,664,580
14,800,400
105,664,180
20,000,000
9,200,000
2,000,000
12,000,000
–
D Bramhill
J O’Farrell
M Durham
R Godson
Directors who served during the year and subsequently are
as follows:
David Bramhill (executive director).
Joseph O’Farrell (executive director).
Martin Durham (non-executive director).
Ray Godson (non-executive director) was appointed
on 30 July 2013.
William O’Dea (non-executive director) resigned
on 30 July 2013.
Directors’ Remuneration Report
The remuneration of the directors for the year ended
31 December 2013 and the period ended 31 December
2012 was as follows:
D Bramhill
J O’Farrell
M Durham
R Godson
salaries and Fees
2013
£
2012
£
77,439
62,686
25,000
25,000
–
–
–
–
Included in the above is £55,939 paid to D Bramhill and
£57,358 to J O’Farrell, respectively, net of tax and national
insurance, in shares at par value of 0.25p per share.
R Godson received a fee of £25,000 for his services through
his consultancy firm, Godson and Co. No amounts were
outstanding at the year end in this respect.
Directors’ remuneration is disclosed in note 3 of these
financial statements.
Copies of the Service Agreements in respect of D Bramhill
and J O’Farrell are available for inspection at the Company’s
Registered Office. Copies of the Letters of Appointment
in respect of M Durham and R Godson are available for
inspection at the Company’s Registered Office.
Annual General Meeting
The Annual General Meeting of the Company will be held
on 29 May 2014 in accordance with the Notice of Annual
General Meeting on page 35. Details of the resolutions
to be passed are included in this notice.
www.unionjackoil.com
Business and Strategy
governance
Financial Statements
Annual General Meeting
11
Events after the Balance Sheet Date
The following events have taken place following the year end:
A placing raising £650,000 before expenses was completed
in March 2014.
In March 2014 shareholders approved a share sub-division
at a General Meeting.
This means that Ordinary shares of 0.25p in the capital of
the Company were sub-divided into one new Ordinary share
of 0.025p each, and one Deferred share of 0.225p.
Disclosure of Information to the Auditor
The directors at the date of the approval of this Annual
Report individually confirm that:
•
•
so far as the director is aware, there is no relevant audit
information of which the Company’s auditor is unaware;
and
the director has taken all the steps that he ought to
have taken as a director in order to make himself aware
of any relevant audit information and to establish that
the Company’s auditor is aware of that information
The new Ordinary shares have the same rights, being subject
to the restrictions and ranking pari passu in all respects with
the existing Ordinary shares (save as to the nominal value).
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the
Companies Act 2006.
Capital Structure
Details of the issued share capital, together with details of
the movements in the Company’s issued share capital during
the year, are shown in note 11. At the Balance Sheet date the
Company had one class of ordinary shares which carry no
right to fixed income. Each share carries the right to one vote
at general meetings of the Company.
Auditor
A resolution to reappoint the Auditor, Deloitte LLP, will be
proposed at the forthcoming Annual General Meeting.
Company Name and Registered Number
The registered number of Union Jack Oil plc is 07497220.
There are also warrants in issue as disclosed in note 11.
On behalf of the Board
Substantial Shareholdings
On 31 March 2014, the Company’s shareholders’ register
showed the following persons holding voting rights of 3%
or more as a shareholder of the Company.
David Bramhill
Chairman
29 April 2014
Name of holder
Percentage of
voting rights
No. of ordinary
shares
Nature of
holding
XCAP Nominees Limited
Joseph O‘Farrell
Hargreave Hale Limited
David Bramhill
19.07%
9.40%
7.90%
4.00%
213,638,889 Beneficial
105,664,180
Beneficial
88,888,889 Beneficial
Beneficial
44,664,580
12
Union Jack oil plc
Annual Report and
Financial Statements
2013
Corporate Governance Report
for the year ended 31 December 2013
Internal Financial Control
The directors are responsible for establishing and
maintaining the Company’s internal financial control
systems. These are designed to meet the particular needs
of the Company and the risks to which it is exposed, and
by their nature can provide reasonable but not absolute
assurance against material misstatement or loss.
The key procedures that the directors have established to
provide effective internal financial controls are:
•
Identification of Business Risks
The Board is responsible for identifying the major
business risks faced by the Company and for determining
the appropriate course of action to manage these risks.
•
Investment Appraisal
Capital expenditure is regulated by authorisation limits.
For expenditure beyond the specified limits including
investments in exploration projects, detailed proposals
are submitted to the Board for review and sign-off.
• Financial Reporting
The Company has a comprehensive system for reporting
financial results to the Board.
• Audit Committee
The Audit Committee monitors, through reports made to
it, the controls that are in force and any perceived gaps
in the control environment. The Audit Committee also
considers and determines relevant action in respect of
any control issues raised by the external auditor.
The Company’s securities are traded on the AIM Market of the
London Stock Exchange (“AIM”). The Company has considered
the Quoted Company Alliance (“QCA”) corporate governance
guidelines for AIM companies relevant to the Company.
The Board
During the year the Board of directors of Union Jack Oil plc
consisted of two executive directors and two non-executive
directors as disclosed within the Directors, Officers and
Advisers section of this report, who were responsible for
the proper management of the Company. The Board met
in person or by telephone, as permitted by the current
articles of association, ten times during the year.
The Board will meet at least four times in the coming year
to review trading performance and budgets, ensure adequate
funding, set and monitor strategy, examine acquisition
opportunities and report to shareholders. The Board has
a formal schedule of matters specifically reserved to it for
decisions.
Remuneration Committee
The Remuneration Committee comprises Martin Durham,
who acts as its Chairman, and Ray Godson. It determines
the employment terms and total remuneration of the
executive directors.
The Committee makes recommendations to the Board on
overall remuneration for the executive directors in order to
attract, retain and motivate high quality executives capable
of achieving the Company’s objectives. The current package
comprises basic salary only. Directors remuneration for the
year is noted in the Directors’ Report and shown in note 3
on page 24.
Those disclosures form part of this report.
The remuneration of non-executive directors is determined
by the Board.
Audit Committee
The Audit Committee comprises Ray Godson, who acts as its
Chairman, and Martin Durham. The Committee is responsible
for considering a wide range of financial matters. It monitors
the controls that are in place to ensure the integrity of the
financial information reported to shareholders.
This Committee also provides a forum for reporting by the
Company’s auditor. The executive directors may attend
meetings by invitation.
www.unionjackoil.com
Business and Strategy
governance
Financial Statements
Annual General Meeting
13
Directors' Responsibilities Statement
for the year ended 31 December 2013
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
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 are required to prepare the 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
Company and of the profit or loss of the Company for that
period. In preparing these financial statements, International
Accounting Standard 1 requires that directors:
• properly select and apply accounting policies;
• present information, including accounting policies,
in a manner that provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures when compliance with
the specific requirements in IFRSs are insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the entity’s
financial position and financial performance; and
• make an assessment of the Company’s ability to continue
as a going concern.
14
Union Jack oil plc
Annual Report and
Financial Statements
2013
Independent Auditor's Report
on the Financial Statements
to the Members of Union Jack Oil plc
We have audited the financial statements of Union Jack
Oil plc (“the Company”) for the year ended 31 December
2013 which comprise the Income Statement, Statement
of Comprehensive Income, Balance Sheet, Statement of
Changes in Equity, Statement of Cash Flows, Principal
Accounting Policies and the related notes 1 to 20. 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.
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.
Respective Responsibilities of Directors and Auditor
As explained more fully in the Directors’ Responsibilities
Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with
the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the Company’s
circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant
accounting estimates made by the directors, and the overall
presentation of the financial statements. In addition, we read
all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that
is apparently materially incorrect based on , or materially
inconsistent with, the knowledge acquired by us in the course
of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the
implications for our report.
Opinion on Financial Statements
In our opinion the financial statements:
•
•
•
give a true and fair view of the state of the Company’s
affairs as at 31 December 2013 and of its loss for the
year then ended;
have been properly prepared in accordance with IFRSs
as adopted by the European Union; and
have been prepared in accordance with the requirements
of the Companies Act 2006.
Opinion on Other Matter Prescribed by the Companies
Act 2006
In our opinion the information given in the Strategic Report
and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements.
Matters on which we are Required to Report by
Exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you
if, in our opinion:
•
•
•
adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
the financial statements and the part of the Directors’
Remuneration Report to be audited 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.
Sonya Butters
Senior Statutory Auditor
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Bristol, United Kingdom
29 April 2014
www.unionjackoil.com
Income Statement
for the year ended 31 December 2013
Business and Strategy
Governance
Financial statements
Annual General Meeting
15
Revenue
notes
31.12.13
£
period 1.2.12
to 31.12.12
£
–
–
Administrative expenses before AIM admission costs
(514,470)
(142,966)
AIM admission costs
(199,406)
–
Total administrative expenses
(713,876)
(142,966)
Operating loss
Finance income
Loss before taxation
Taxation
2
4
5
(713,876)
(142,966)
5,025
393
(708,851)
(142,573)
(69)
–
Loss for the financial year
(708,920)
(142,573)
Attributable to:
Equity shareholders of the Company
(708,920)
(142,573)
Loss per share
Basic and diluted loss per share (pence)
6
(0.12)
(0.24)
The accompanying accounting policies and notes form an integral part of these financial statements.
16
Union Jack oil plc
Annual Report and
Financial Statements
2013
Statement of Comprehensive Income
for the year ended 31 December 2013
Loss for the financial year
Other comprehensive income
31.12.13
£
period 1.2.12
to 31.12.12
£
(708,920)
–
(142,573)
–
Total comprehensive loss for the financial year
(708,920)
(142,573)
The accompanying accounting policies and notes form an integral part of these financial statements.
www.unionjackoil.com
Balance Sheet
as at 31 December 2013
Assets
Non-current assets
Exploration and evaluation assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Net assets
Capital and reserves attributable to the
Company’s equity shareholders
Called up share capital
Share-based payments reserve
Retained earnings
Business and Strategy
Governance
Financial statements
Annual General Meeting
17
notes
31.12.13
£
31.12.12
£
7
8
9
10
44,294
20,000
64,294
–
–
–
40,673
867,207
25,564
485,187
907,880
510,751
972,174
510,751
17
71,262
31,157
71,262
31,157
900,912
479,594
11
12
12
2,079,201
284,263
(1,462,552)
607,451
14,716
(142,573)
Total equity
900,912
479,594
The financial statements of Union Jack Oil plc, registered number 07497220, were approved and authorised for issue by the
Board of Directors on 29 April 2014 and were signed on its behalf by:
David Bramhill
Director
The accompanying accounting policies and notes form an integral part of these financial statements.
18
Union Jack oil plc
Annual Report and
Financial Statements
2013
Statement of Changes in Equity
for the year ended 31 December 2013
share
capital
£
retained
earnings
£
share-based
payment
reserve
£
total
£
Balance at 1 February 2012 (unaudited)
1
–
–
1
Changes in equity
Issue of share capital
Total comprehensive income
Share-based payment charge
607,450
–
–
–
(142,573)
–
–
–
14,716
607,450
(142,573)
14,716
Balance at 31 December 2012
607,451
(142,573)
14,716
479,594
Balance at 1 January 2013
607,451
(142,573)
14,716
479,594
Changes in equity
Issue of share capital
Issue costs
Total comprehensive income
Share-based payment charge
1,471,750
–
–
–
–
(611,059)
(708,920)
–
–
–
–
269,547
1,471,750
(611,059)
(708,920)
269,547
Balance at 31 December 2013
2,079,201
(1,462,552)
284,263
900,912
The accompanying accounting policies and notes form an integral part of these financial statements.
www.unionjackoil.com
Business and Strategy
Governance
Financial statements
Annual General Meeting
19
Statement of Cash Flows
for the year ended 31 December 2013
Cash flow from operating activities
Cash flow from investing activities
Purchase of intangible assets
Purchase of investments
Interest received
Net cash used in investing activities
Cash flow from financing activities
Proceeds on issue of new shares
Cost of issuing new shares
notes
13
31.12.13
£
period 1.2.12
to 31.12.12
£
(688,949)
(117,656)
(44,294)
(20,000)
5,025
(59,269)
–
–
393
393
1,471,750
(341,512)
602,450
–
Net cash generated from financing activities
1,130,238
602,450
Net increase in cash and cash equivalents
382,020
485,187
Cash and cash equivalents at beginning of financial year
485,187
–
Cash and cash equivalents at end of financial year
10
867,207
485,187
The accompanying accounting policies and notes form an integral part of these financial statements.
20
Union Jack oil plc
Annual Report and
Financial Statements
2013
Principal Accounting Policies
Union Jack Oil plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The address of
the registered office is 6 Charlotte Street, Bath BA1 2NE,
England. The nature of the Company’s operations and its
principal activities are set out in the Directors’ Report,
Strategic Report and Review of Operations. These financial
statements are presented in pounds sterling because that
is the currency of the primary economic environment in
which the Company operates.
Basis of Preparation
The annual financial statements of Union Jack Oil plc
(“the Company”) have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as
adopted by the European Union (“EU”) applied in accordance
with the provisions of the Companies Act 2006.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and
deposits held at call with banks.
Financial Instruments
Financial assets and financial liabilities are recognised
on the Balance Sheet when the Company becomes a party
to the contractual provisions of the instrument.
Trade and other receivables are initially measured at fair
value, and are subsequently measured at amortised cost
using the effective interest method.
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost using the
effective interest rate method.
IFRS is subject to amendment and interpretation by
the International Accounting Standards Board (“IASB”)
and the IFRS interpretations Committee, and there is
an on-going process of review and endorsement by the
European Commission. These accounting policies comply
with each IFRS that is mandatory for accounting periods
ending on 31 December 2013.
Exploration and Evaluation Costs
The Company follows a successful efforts based accounting
policy for oil and gas assets.
Costs (including research costs) incurred prior to obtaining
the legal rights to explore an area will be expensed
immediately to the Income Statement.
The financial statements have been prepared under the
historical cost convention. The principal accounting policies
set out below have been consistently applied to all periods
presented.
Going Concern
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company
has 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 financial
statements. Further detail is contained in the Strategic
Report on page 5.
Expenditure incurred on the acquisition of a licence interest
will initially be capitalised on a licence by licence basis. Costs
will be held, unimpaired, within exploration and evaluation
costs until such a time as the exploration phase on the
licence area is complete or commercial reserves have been
discovered.
Exploration expenditure incurred in the process of
determining exploration targets will be capitalised initially
within intangible assets as exploration and evaluation costs.
Exploration costs will initially be capitalised on a well by well
basis until the success or otherwise has been established.
The success or failure of each exploration/evaluation effort
will be judged on a well by well basis. Drilling costs will be
written off on completion of a well unless the results indicate
that hydrocarbon reserves exist and there is a reasonable
prospect that these reserves are commercially viable.
www.unionjackoil.com
Principal Accounting Policies
Business and Strategy
Governance
Financial statements
Annual General Meeting
21
All such costs will be subject to regular technical, commercial
and management review for indicators of impairment on at
least an annual basis which includes confirming the continued
intent to develop or otherwise extract value from the licence,
prospect or discovery. Where this is no longer the case, the
costs will be immediately expensed.
Following evaluation of successful exploration wells, if
commercial reserves are established and the technical
feasibility of extraction is demonstrated, and once a project
is sanctioned for commercial development, then the related
capitalised exploration/evaluation costs will be transferred
into a single field cost centre within development/producing
assets after testing for impairment within Property, Plant
and Equipment. Where results of exploration drilling indicate
the presence of hydrocarbons which are ultimately not
considered commercially viable, all related costs will be
written off to the Income Statement.
All costs incurred after the technical feasibility and
commercial viability of producing hydrocarbons have been
demonstrated will be capitalised within development/
producing assets on a field by field basis. Subsequent
expenditure will be capitalised only where it either enhances
the economic benefits of the development/producing asset
or replaces part of the existing development/producing
asset. Any costs remaining associated with the part replaced
will be expensed.
Net proceeds from any disposal of an exploration asset
will initially be credited against the previously capitalised
costs. Any surplus proceeds will be credited to the Income
Statement.
Plug and suspend and demobilisation costs will be recognised
in full when wells have been suspended or facilities installed.
A corresponding amount equivalent to the provision will also
be recognised as part of the cost of the asset. The amount
recognised will be the estimated cost of decommissioning,
discounted to its net present value, and will be reassessed
each year. Changes in the estimated timing or cost estimates
will be dealt with prospectively by recording and adjustment
to the provision, and a corresponding adjustment to the
decommissioning asset. The unwinding of the discount on the
decommissioning provision will be included as a finance cost.
Taxation
The tax expense represents the sum of current and
deferred tax.
Current Tax
Current tax is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income
statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The
Company’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by
the Balance Sheet date.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and
is accounted for using the Balance Sheet liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities
in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where
the Company is able to control the reversal of the temporary
difference and it is probable that the temporary difference
will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at
each Balance Sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
22
Union Jack oil plc
Annual Report and
Financial Statements
2013
Principal Accounting Policies
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset is realised based on tax laws and rates that have been
enacted or substantively enacted at the Balance Sheet date.
Deferred tax is charged or credited in the Income Statement,
except when it relates to items charged or credited in other
comprehensive income, in which case the deferred tax is also
dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a
net basis.
Equity Instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
Share Based Payments - Warrants
Equity-settled share-based payments in respect of warrants
for professional services are measured at the fair value
of the equity instruments at the grant date, on the basis
that this is immaterially different from the fair value of the
services provided. There are no vesting conditions. Details
regarding the determination of the fair value of equity-
settled share-based transactions are set out in note 11. The
fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis
over the vesting period, based on the Company’s estimate of
equity instruments that will eventually vest. At each Balance
Sheet date, the Company revises its estimate of the number
of equity instruments expected to vest as a result of the
effect of non-market-based vesting conditions. The impact
of the revision of the original estimates, if any, is recognised
in the Income Statement such that the cumulative expense
reflects the revised estimate, with a corresponding
adjustment to equity reserves.
Investments
Investments represent available-for-sale investments and
are initially held at fair value and are subsequently measured
at fair value or at cost where fair value is not readily
ascertainable. Gains and losses arising from changes in fair
value are recognised directly in equity until the investment
is disposed of or is determined to be impaired, at which time
the cumulative gain or loss recognised previously in equity is
included in the net profit or loss for the year.
www.unionjackoil.com
Principal Accounting Policies
Business and Strategy
Governance
Financial statements
Annual General Meeting
23
International Financial Reporting Standards in Issue but not yet Effective
At the date of authorisation of these financial statements, the IFRS Interpretations Committee has issued standards,
interpretations and amendments which are applicable to the Company. Whilst these standards and interpretations are not
effective for, and have not been applied in the preparation of, these financial statements, the following may have an impact
going forward:
IFRS9
IAS 32
IAS 36
Financial Instruments
Disclosures - offsetting financial assets and financial liabilities
Recoverable amount disclosures
The directors anticipate that the adoption of these standards and interpretations in future periods will have no material
impact on the financial statements of the Company.
Critical Accounting Judgements and Key Sources
of Estimation Uncertainty
In the application of the Company’s accounting policies,
which are described in this note, the directors are required
to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both
current and future periods.
The following are the critical judgement and estimates
that the directors have made in the process of applying
the Company’s accounting policies and that have the most
significant effect on the amounts recognised in the financial
statements:
Warrants
In determining the fair value of warrants and the related
charges to the Income Statement, the Company makes
assumptions about future events and market conditions.
The fair value is determined using a valuation model which
is dependent on estimates, including the future volatility
of the Company’s share price and the expected life of the
warrants. This is determined by using historic data from
similar companies and historic trends on exercising warrants
by warrant holders.
Impairment
In assessing the need to impair exploration and evaluation
assets the Board makes assumptions about the future
progress and likely successful outcome of exploration and
drilling activities. At this early stage of exploration of each
investment, these are determined through monitoring market
and industry conditions, competent person reports on each
prospect and information from each licence’s main operator.
24
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notes to the Financial Statements
for the year ended 31 December 2013
Business and Operating Segments
1
The Company commenced trading in the year and is considered to have one operating segment, being the exploration for, and
future development of, hydrocarbon projects in the United Kingdom.
2
Operating Loss
Operating loss is stated after charging:
Staff costs (see note 3)
Fees payable to the Company’s auditor for:
– The audit of these financial statements
– Tax compliance services
– Other assurance services
Total
31.12.13
£
period 1.2.12
to 31.12.12
£
206,623
–
16,500
4,500
100,000
16,000
4,000
–
327,623
20,000
Staff Costs
3
The aggregate payroll cost in the year of the employees, all of whom are directors, was as follows:
Salaries
Social security costs
31.12.13
£
190,125
16,498
206,623
period 1.2.12
to 31.12.12
£
–
–
–
Included in the above is £55,939 and £57,358 paid to D Bramhill and J O’Farrell, respectively, net of tax and national
insurance, in shares at par value of 0.25p per share.
The average number of persons employed by the company during the year was 4 (2012: 4).
Details of each director’s remuneration are included in the Directors’ Report.
Highest paid director
The highest paid director received remuneration of £77,439 (2012 : nil).
www.unionjackoil.com
Notes to the Financial Statements
for the year ended 31 December 2013
4
Finance Income
Bank interest
5
Taxation
Business and Strategy
Governance
Financial statements
Annual General Meeting
25
31.12.13
£
period 1.2.12
to 31.12.12
£
5,025
393
31.12.13
£
period 1.2.12
to 31.12.12
£
Current tax
UK corporation tax
Adjustment in respect of prior periods
Total UK corporation tax charge
–
69
69
The differences between the current tax shown above and the amount calculated by applying the standard rate of UK
corporation tax for oil and gas companies of 62% (31 December 2012: 62%) to the loss before tax is as follows:
£
–
–
–
£
Loss on ordinary activities before tax
Tax on Company loss on ordinary activities at standard UK
corporation tax rate of 62% (31 December 2012: 62%)
Effects of:
Disallowable expenses
Losses carried forward
Adjustment in respect of prior periods
(708,851)
(142,573)
439,488
88,395
(141,284)
(298,204)
69
(57,525)
(30,870)
–
Current tax charge for year
69
–
During the year the Company paid £69 corporation tax on its finance income for the previous year of £393.
The Company is not aware of any factors that will materially affect the future tax charge.
A deferred tax asset of £329,074 (2012: £30,870) relating to the carry forward of losses from trading and pre-trading
expenditure has not been recognised in the year as at present it is not envisaged that any tax will become payable in the
foreseeable future against which those losses could be utilised as deductions.
26
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notes to the Financial Statements
for the year ended 31 December 2013
Loss Per Share
6
The Company has issued warrants over ordinary shares which could potentially dilute basic earnings per share in the future.
Further details are given in note 11.
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
During the current and prior year the Company had warrants in issue as detailed in note 11. These warrants have not been
taken into account when calculating the diluted loss per share as their impact was anti-dilutive. Therefore the basic and
diluted loss per share are the same.
loss per share
2013
pence
2012
pence
Loss per share from continuing operations
(0.12)
(0.24)
The loss and weighted average number of ordinary shares used in the calculation of loss per share are as follows:
2013
£
2012
£
Loss used in the calculation of total basic and diluted earnings per share
(708,920)
(142,573)
number of shares
number
number
Weighted average number of ordinary shares for the purposes of basic and
diluted loss per share
585,020,400
59,450,909
The deferred shares noted within note 20 have not been included within the calculations of basic or diluted shares above
on the basis that IAS 33 defines an ordinary share as an equity instrument that is subordinate to all other classes of equity
instruments. Any residual interest in the assets of the Company would not, on liquidation, go to the deferred shareholders,
hence they are not considered subordinate.
www.unionjackoil.com
Notes to the Financial Statements
for the year ended 31 December 2013
7
Intangible Assets
At 1 January 2013
Costs incurred during the year
At 31 December 2013
Business and Strategy
Governance
Financial statements
Annual General Meeting
27
exploration and
evaluation assets
£
–
44,294
44,294
Investments
8
During the year the Company purchased 90,908 ordinary shares in Elephant Oil Limited, a company registered in England
and Wales, for which it paid £20,000. Elephant Oil Limited has 20,201,571 ordinary shares in issue. Union Jack Oil plc has a
0.45% interest in that company.
9
Trade and Other Receivables
Other debtors – unpaid share capital
VAT
Prepayments
31.12.13
£
–
5,122
35,551
31.12.12
£
5,000
16,814
3,750
40,673
25,564
The directors consider that the carrying values of trade and other receivables are approximate to their fair value.
All of the Company’s receivables have been reviewed for indications of impairment. None of the receivables was found to be
impaired.
28
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notes to the Financial Statements
for the year ended 31 December 2013
10
Cash and Cash Equivalents
Cash at bank
31.12.13
£
31.12.12
£
867,207
485,187
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.
The carrying amount of these assets is equal to their fair value.
11(a) Share Capital
allotted and issued:
number
class
nominal
value
31.12.13
£
31.12.12
£
831,680,400
(31 December 2012: 242,980,400)
Ordinary
0.25p
2,079,201
607,451
Allotments during the year
On 28 February 2013 the Company issued 224,900,000 ordinary shares at par value of 0.25p.
Also 363,800,000 ordinary shares were issued by the Company at par value of 0.25p on 30 July 2013.
Issue costs have been recognised in retained earnings as there is no share premium, see note 12. £269,457 of the issue
costs were in the form of warrants, hence there was no cash impact.
Events after the Balance Sheet Date
After the year ended 31 December 2013 the Company amended the class of shares as disclosed in note 20.
www.unionjackoil.com
Notes to the Financial Statements
for the year ended 31 December 2013
Business and Strategy
Governance
Financial statements
Annual General Meeting
29
11(b) Share-Based Payments –Warrants
During the year the Company issued share warrants which are exercisable within five years and eighteen months respectively.
Details of the number of warrants and the weighted average exercise price (WAEP) outstanding during the year are as follows:
year ended december 2013
number of warrants
Outstanding at the beginning of the year
Issued in the year
9,719,216
339,200,000
Waep
£
0.003
0.003
Outstanding and exercisable at the end of the year
348,919,216
0.003
period ended december 2012
number of warrants
Outstanding at the beginning of the period
Issued in the period
–
9,719,216
Waep
£
–
0.003
Outstanding and exercisable at the end of the period
9,719,216
0.003
The fair values of warrants issued were calculated using the Black-Scholes model. The inputs into the model are as follows:
date of grant
4 december 2012
20 december 2012
22 July 2013
30 July 2013
Number granted
Share price at date of grant
Exercise price
Expected volatility
Expected life (years)
Risk free rate
Expected dividend yield
Fair value at date of grant
Earliest vesting date
6,074,510
0.3p
0.25p
69%
5.0
0.8464%
0%
£11,099
3,644,706
0.3p
0.25p
69%
2.5
0.8464%
0%
£5,194
20 December 2012 20 December 2012
320,000,000
0.25p
0.30p
77%
1.5
1.2064%
0%
£245,655
30 July 2013
19,200,000
0.25p
0.25p
77%
2.5
1.2064%
0%
£22,358
30 July 2013
Expiry date
20 December 2022 20 December 2017
30 July 2018 21 January 2015
The Company gained admission to the ISDX Growth Market during December 2012, and subsequently to the AIM Market
during July 2013, and therefore expected volatility was calculated using comparable companies.
The Company recognised total expenses of £269,547 (period to 31 December 2012: £14,716) related to equity-settled
share-based payment transactions during the year. As those costs relate to the raising of equity, they have been debited to
retained earnings rather than expensed.
30
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notes to the Financial Statements
for the year ended 31 December 2013
12
Reserves
At 1 January 2013
Loss for the year
Share issue costs (note 11a)
Credit for the year (note 11b)
retained
earnings
£
(142,573)
(708,920)
(611,059)
–
share-based
payment
reserve
£
14,716
–
–
269,547
totals
£
(127,857)
(708,920)
(611,059)
269,547
At 31 December 2013
(1,462,552)
284,263
(1,178,289)
At 1 February 2012
Loss for the period
Credit for the period (note 11b)
–
(142,573)
–
–
–
14,716
–
(142,573)
14,716
At 31 December 2012
(142,573)
14,716
(127,857)
13
Reconciliation of Loss to Cash Generated from Operations
Loss before taxation
Finance income
Income taxes paid
Share-based payments
Increase in trade and other receivables
Increase in trade and other payables
31.12.13
£
period 1.2.12
to 31.12.12
£
(708,851)
(5,025)
(69)
–
(142,573)
(393)
–
14,716
(713,945)
(128,250)
(15,109)
40,105
(20,563)
31,157
Cash used in operations
(688,949)
(117,656)
www.unionjackoil.com
Notes to the Financial Statements
for the year ended 31 December 2013
Financial Instruments
14
Classification of financial instruments
Business and Strategy
Governance
Financial statements
Annual General Meeting
31
The tables below set out the Company’s accounting classification of each class of its financial assets and liabilities.
Financial assets measured at fair value
At 31 December 2013
Investments: available-for-sale
At 31 December 2012
Investments: available-for-sale
The fair value assets are equal to cost.
Financial assets measured at amortised cost
At 31 December 2013
Other receivables
Cash and cash equivalents
Total carrying value
At 31 December 2012
Other receivables
Cash and cash equivalents
Total carrying value
£
20,000
–
£
5,122
867,207
872,329
21,814
485,187
507,001
All of the above financial assets’ carrying values approximate to their fair values at 31 December 2013 and 31 December
2012, given their nature and short times to maturity.
32
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notes to the Financial Statements
for the year ended 31 December 2013
14
Financial Instruments (continued)
Financial liabilities measured at amortised cost
At 31 December 2013
Trade payables
Accruals
Other creditors
Total carrying value
At 31 December 2012
Trade payables
Accruals
Other creditors
Total carrying value
All of the above financial liabilities’ carrying values approximate to their fair values at 31 December 2013 and
31 December 2012 given their nature and short times to maturity.
£
48,762
21,000
1,500
71,262
15,157
16,000
–
31,157
www.unionjackoil.com
Notes to the Financial Statements
for the year ended 31 December 2013
Business and Strategy
Governance
Financial statements
Annual General Meeting
33
Financial Instrument Risk Exposure and Management
15
The principal financial risks to which the Company is exposed are: capital management, liquidity risk and credit risk. This note
describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them.
Financial assets held at fair value represent investments classified as available-for-sale. These have been classified as Level 3
financial instruments as their fair value has been based on cost in light of no observable market data.
No financial liabilities are held at fair value.
Credit risk
The Company’s credit risk is primarily attributable to its cash balances and such risk is limited because the third party
is an international bank.
The Company’s total credit risk amounts to the total of the sum of the receivables, cash and cash equivalents. At the year end
this amounted to £872,329 ( 2012: £507,001).
Liquidity risk
In managing liquidity risk, the main objective of the Company is to ensure that it has the ability to pay all of its liabilities as they
fall due. The Company monitors its levels of working capital to ensure that it can meet its debt repayments as they fall due.
The table below shows the undiscounted cash flows on the Company’s financial liabilities as at 31 December 2013 and
31 December 2012 on the basis of their earliest possible contractual maturity.
At 31 December 2013
Trade payables
Accruals
Other creditors
At 31 December 2012
Trade payables
Accruals
Other creditors
Capital management
£
total
£
Within
2 months
Within
2-6 months
£
£
greater
than
6 months
48,762
21,000
1,500
48,762
–
1,500
–
21,000
–
71,262
50,262
21,000
15,157
16,000
–
15,157
–
–
–
16,000
–
31,157
15,157
16,000
–
–
–
–
–
–
–
–
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, add shareholder
value and to maintain an optimal capital structure to reduce the cost of capital. The Company defines capital as being share
capital plus reserves as disclosed in the Balance Sheet.
The Board of Directors monitors the level of capital as compared to the Company’s commitments, and adjusts the level of
capital as is determined to be necessary, by issuing shares.
The Company is not subject to any externally imposed capital requirements.
34
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notes to the Financial Statements
for the year ended 31 December 2013
Financial Commitments
16
At 31 December 2013 the company was committed to its share of drilling costs at the Burton on the Wolds and Wressle
Prospects. These costs are expected to total approximately £800,000.
17
Trade and Other Payables
Trade payables
Accruals
Other creditors
31.12.13
£
48,762
21,000
1,500
31.12.12
£
15,157
16,000
–
71,262
31,157
Related Party Transactions
18
Related party transactions during the year comprised payments to directors. This includes amounts disclosed in note 3
of these financial statements for directors’ remuneration and £25,000 paid to Godson and Co. Chartered Accountants,
a company under the control of R Godson, in respect of fees paid for services rendered. At each year end no amounts
were owed to or by the Company in respect of these transactions.
In addition, included in other creditors is £500 (2012: £nil) owed to M Durham, a director of the Company, for an over-
payment by him on subscription for shares.
Contingent Liabilities
19
The directors are not aware of any contingent liabilities at 31 December 2013 nor 31 December 2012.
20
Events after the Balance Sheet Date
The following events have taken place following the year end:
A placing raising £650,000 before expenses was completed in March 2014.
In March 2014 shareholders approved a share sub-division at a General Meeting.
This means that, Ordinary shares of 0.25p in the capital of the Company were sub-divided into one new Ordinary share
of 0.025p each, and one Deferred share of 0.225p.
The new Ordinary shares have the same rights, being subject to the restrictions and ranking pari passu in all respects with
the existing Ordinary shares (save as to the nominal value).
www.unionjackoil.com
Business and Strategy
Governance
Financial Statements
annual general meeting
35
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting (the
“AGM”) of Union Jack Oil plc (the “Company”) will be held at
the offices of Osborne Clarke, 2 Temple Back East, Temple
Quay, Bristol BS1 6EG on 29 May 2014 at 11.00 a.m. to
consider and, if thought fit, pass the following resolutions,
of which resolutions numbered 1 to 6 will be proposed as
ordinary resolutions and resolution numbered 7 will be
proposed as a special resolution:
Ordinary Resolutions
Report and Accounts
1 To receive the audited annual accounts of the Company
for the year ended 31 December 2013, together with
the Directors’ Report and the Auditor’s Report on those
annual accounts.
Re-election of Director at his First AGM
2 To re-elect Raymond Godson as a director, who offers
himself for re-election in accordance with the Company’s
articles of association.
Re-election of Director Retiring by Rotation
3 To re-elect Martin Durham as a director, who retires by
rotation in accordance with the Company’s articles of
association.
Re-appointment of Auditor
4 To re-appoint Deloitte LLP as auditor of the Company to
hold office from the conclusion of this Annual General
Meeting until the conclusion of the next general meeting
at which accounts are laid before the Company.
Auditor’s Remuneration
5 To authorise the directors to determine the remuneration
of the auditor.
Directors’ Authority to Allot Shares
6 That, in substitution for any equivalent authorities and
powers granted to the directors prior to the passing of
this resolution, the directors be and they are generally
and unconditionally authorised pursuant to Section 551
of the Companies Act 2006 (the “Act”) to exercise all
powers of the Company to allot shares in the Company,
and to grant rights to subscribe for or to convert
any security into shares in the Company (“Relevant
Securities”) up to an aggregate nominal amount of
£280,142.32 (representing 100% of the issued share
capital of the Company at the date of this notice)
provided that, unless previously revoked, varied or
extended, this authority shall expire on the conclusion of
the next Annual General Meeting of the Company, except
that the Company may at any time before such expiry
make an offer or agreement which would or might require
Relevant Securities to be allotted after such expiry and
the directors may allot Relevant Securities in pursuance
of such an offer or agreement as if this authority had not
expired.
Special Resolution
Directors’ Power to Issue Shares for Cash
7 That, conditional upon the passing of resolution
numbered 6, the directors be and they are empowered
pursuant to Section 570(1) of the Act to allot equity
securities (as defined in Section 560(1) of the Act) of
the Company wholly for cash pursuant to the authority
of the directors under Section 551 of the Act conferred
by resolution 6 above as if Section 561(1) of the Act
did not apply to such allotment provided that the
power conferred by this resolution shall be limited to
the allotment of equity securities up to an aggregate
nominal value equal to £140,071.16 (representing 50%
of the issued share capital of the Company at the date
of this notice) and, unless previously revoked, varied or
extended, this power shall expire on the conclusion of
the next Annual General Meeting of the Company, except
that the Company may before the expiry of this power
make an offer or agreement which would or might require
equity securities to be allotted after such expiry and the
directors may allot equity securities in pursuance of such
an offer or agreement as if this power had not expired.
By order of the Board
Brian Marshall FCA
Company Secretary
Dated: 29 April 2014
Registered Office:
6 Charlotte Street
Bath BA1 2NE
5 The notes to the proxy form include instructions on
how to appoint a proxy by using the CREST proxy
appointment service.
6
In the case of joint holders of shares, the vote of the first
named in the register of members who tenders a vote,
whether in person or by proxy, shall be accepted to the
exclusion of the votes of other joint holders.
7 A member that is a company or other organisation not
having a physical presence cannot attend in person but
can appoint someone to represent it. This can be done
in one of two ways: either by the appointment of a proxy
(described in Notes 3 to 5 above) or of a corporate
representative. Members considering the appointment
of a corporate representative should check their own
legal position, the Company’s articles of association and
the relevant provision of the Companies Act 2006.
8 Copies of the executive directors’ service contracts
with the Company and letters of appointment of the
non-executive directors are available for inspection at
the registered office of the Company during the usual
business hours on any weekday (Saturday, Sunday or
public holidays excluded) from the date of this notice
until the conclusion of the AGM.
36
Union Jack oil plc
Annual Report and
Financial Statements
2013
Notice of Annual General Meeting
Notes:
1 Pursuant to Regulation 41 of the Uncertificated
Securities Regulations 2001 (as amended), only those
members registered in the register of members of the
Company at 11.00 a.m. on 27 May 2014 (or if the AGM
is adjourned, 48 hours before the time fixed for the
adjourned AGM) shall be entitled to attend and vote at
the AGM in respect of the number of shares registered
in their name at that time. In each case, changes to the
register of members after such time shall be disregarded
in determining the rights of any person to attend or vote
at the AGM.
2
If you wish to attend the AGM in person, you should arrive
at the offices of Osborne Clarke, 2 Temple Back East,
Temple Quay, Bristol BS1 6EG in good time before the
AGM, which will commence at 11.00 a.m. In order to gain
admittance to the AGM, members may be required to
prove their identity.
3 A member who is entitled to attend, speak and vote at
the AGM may appoint a proxy to attend, speak and vote
instead of him. A member may appoint more than one
proxy provided each proxy is appointed to exercise rights
attached to different shares (so a member must have
more than one share to be able to appoint more than one
proxy). A proxy need not be a member of the Company
but must attend the AGM in order to represent you. A
proxy must vote in accordance with any instructions
given by the member by whom the proxy is appointed.
Appointing a proxy will not prevent a member from
attending in person and voting at the AGM (although
voting in person at the AGM will terminate the proxy
appointment). A proxy form is enclosed. The notes to the
proxy form include instructions on how to appoint the
Chairman of the AGM or another person as a proxy. You
can only appoint a proxy using the procedures set out in
these notes and in the notes to the proxy form.
4 To be valid, a proxy form, and the original or duly certified
copy of the power of attorney or other authority (if
any) under which it is signed or authenticated, should
reach the Company’s registrar, Computershare Investor
Services PLC of The Pavilions, Bridgwater Road, Bristol
BS99 6ZY, by no later than 11.00 a.m. on 27 May 2014.
Union Jack Oil plc
6 Charlotte Street,
Bath BA1 2NE,
England
Telephone: +44 (0) 1225 428139
Fax:
+44 (0) 1225 428140
Email: info@unionjackoil.com
Web: www.unionjackoil.com