UNION JACK OIL plc
ANNUAL REPORT AND
FINANCIAL STATEMENTS
2014
Drilling, Development and
Investment in the United Kingdom
Onshore Hydrocarbon Sector
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
DIRECTORS, OFFICERS AND ADVISERS
DIRECTORS
David Bramhill
Executive Chairman
Joseph O’Farrell
Executive
Graham Bull
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
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
SP Angel Corporate Finance LLP
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP,
England
OIL AND GAS ADVISERS
SP Angel Corporate Finance LLP
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP,
England
PUBLIC RELATIONS
CONSULTANTS
Yellow Jersey PR Limited
South Building,
Upper Farm,
Wootton St. Lawrence,
Basingstoke RG23 8PE,
England
1
CONTENTS
BUSINESS AND STRATEGY
2
6
8
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
14
16
17
18
FINANCIAL STATEMENTS
19
Income Statement
20
Statement of
Comprehensive Income
21
22
23
24
28
38
40
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
Explanatory Note for Consolidation
Resolution
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
PEDL180
WRESSLE
8.33%
PEDL201
BURTON ON
THE WOLDS
10%
PEDL253
BISCATHORPE
10%
PEDL241
NORTH KELSEY
10%
www.unionjackoil.com
2
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 2014.
As a result of the fundraising activity undertaken in 2014
the Company is in a strong financial position with a cash
balance of approximately £3.0 million at the time of writing.
The Company is consequently adequately funded for
the foreseeable future and is able to maintain its current
planned drilling programme for 2015 and cover its working
capital requirements without resorting to shareholders for
additional funding. The oil and gas sector currently is faced
with challenging times, however, given our focus on low cost
onshore projects, this does not impact on any plans we have
for future growth and we remain on course and intend to
participate in the expected drilling of the Biscathorpe-2 and
North Kelsey-1 wells in late 2015. In addition, the current
environment provides the potential for opportunities to
acquire, at good value, interests within new projects.
The Board’s immediate preference and focus is on
conventional projects where costs are manageable and
monetisation of any discoveries can be achieved within a
relatively short timeframe, utilising a simple development
plan in most cases. Due to the low cost nature of these
projects, onshore exploration within the UK remains an
attractive prospect in a low oil price environment.
In addition to the financial stability of the Company, I am
also very pleased that our first well, Wressle-1, in which
the Company holds an 8.33% interest, has resulted in a
discovery which is being fast-tracked in respect of potential
monetisation and test production which is anticipated
to provide a second half 2015 revenue contribution.
The Company’s strategic objective remains focused
on building a successful hydrocarbon exploration and
development business, located primarily onshore in the
United Kingdom, by acquiring interests in drill ready
prospects, adding value and drilling them. We intend
to continue to develop our portfolio of interests in drill
ready prospects.
Wressle-1 has resulted in a discovery which
is being fast-tracked in respect of potential
monetisation and test production which is
anticipated to provide a second half 2015
revenue contribution
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 3
In the year under review there has been drilling activity on
two projects, Wressle and Burton on the Wolds, located on
PEDL180 and PEDL201 respectively. The highlight has been
the discovery of hydrocarbons in respect of the Wressle-1
exploration well. Subsequent testing of the well has
demonstrated the recovery of good quality oil and gas from
three separate zones producing in excess of 700 barrels of
oil equivalent per day gross resulting in the decision by the
partnership comprising the operator Egdon Resources UK
Limited (“Egdon”), Celtique Energie Petroleum Limited,
Europa Oil and Gas plc and Union Jack to subject the well to
an Extended Well Test (“EWT”) in respect of the Ashover
Grit and Penistone Flags formations in order to determine
commerciality. Equipment for this operation is currently
being sourced by the operator Egdon and the EWT tests
are expected to commence in the very near future.
The Burton on the Wolds-1 exploration well, seeking
conventional hydrocarbons, penetrated only thin sands in
the primary reservoir objective, the Rempstone Sandstone
group, and subsequently the well was plugged and the well-
site will be restored to its original condition as agricultural
land. However, PEDL201 remains of continued interest.
Further independent and in-house reviews are planned for
2015 to evaluate the further potential of this licence block.
In June 2014, an independent technical review was executed
by Molten Limited (“Molten”) on behalf of the Company
over the unconventional potential of the northern part of
PEDL201 within the Widmerpool Gulf. The results of this
work, using the SPE standard required for a Competent
Persons Report, as set out in the AIM note for Mining
and Oil and Gas Companies, indicated that the mean
gross unrisked deterministic in place volumetric estimates
approximate to 5.4 billion barrels of oil and over 2.7 trillion
standard cubic feet of gas.
Union Jack’s equity interest in this figure within the shale
area would amount to approximately 540 million barrels
of oil initially in place and 270 billion standard cubic feet
of gas initially in place.
The Molten report offers excellent encouragement as to
the potential value of our interest in PEDL201. However,
there remains a considerable amount of work to be
conducted before any hydrocarbons can be commercially
produced and there is no certainty that any portion
of this resource, if discovered, will be recoverable.
OPERATIONAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Planning consent
granted in December
2014 for the drilling
and any subsequent
testing of the
North Kelsey-1
exploration well
Post period end
planning consent
was granted for
the drilling and any
subsequent testing
of the Biscathorpe-2
exploration well
£3,486,000 of net proceeds
raised through three placings
Cash balance as at
15 May 2015 of £3,000,000
Fully financed for the 2015
planned drilling programme
Discovery at Wressle-1
conventional exploration well
• Good quality oil
recovered from three
stacked zones producing an
un-pumped aggregate of in
excess of 700 barrels of oil
equivalent per day gross
• Extended Well Test
to be conducted in the
near future in order to
confirm commerciality
BUSINESS AND STRATEGYwww.unionjackoil.com 4
CHAIRMAN’S STATEMENT
The Biscathorpe prospect is considered by your
Board to hold high potential and it has been agreed
in principle to acquire a further 2% in PEDL253
CORPORATE AND FINANCIAL
During 2014 the Company raised £3,486,000 net through
three placings. The proceeds of these placings will be used
to fund the drilling of the Biscathorpe-2 and North Kelsey-1
exploration wells, Wressle-1 well testing, other projects and
working capital.
Administrative expenses for the year are effectively
the same as those posted in 2013 before AIM admission
costs. The balance sheet for the year shows cash and
cash equivalents standing at the year end at £3.4 million
(2013: £0.9 million). Net assets have risen to £4.1 million
(2013: £0.9 million).
The Board intends to continue with the same low salary
commitment and does not intend to provide management
with share options until the Company is established as a
production entity.
Our other existing projects are Biscathorpe within
|PEDL253 and North Kelsey within PEDL241 in each
of which the Company holds a 10% interest. Given the
current strength of the balance sheet and expectation
that the Wressle-1 well will contribute revenues in the
future, it is the Board’s intention that the Company
participates in the drilling of the Biscathorpe-2 and North
Kelsey-1 exploration wells. Consequently, the Board will
not exercise its withdrawal option under the supplemental
farmout agreements signed in 2013.
The Biscathorpe prospect is considered to hold high
potential by your Board and it has agreed in principle to
acquire a further combined 2% interest from Egdon and
Montrose Industries Limited, bringing the Company’s
interest to 12% in a well with a mean Prospective Resource
volume for the main reservoir objective, as calculated by
Egdon, of 17.81 million barrels of oil.
North Kelsey-1 has four stacked reservoir objectives and is
calculated by Egdon to have a mean Prospective Resource
of 6.7 million barrels of oil.
Planning permission for the drilling of both wells has been
granted and Egdon has indicated that these conventional
wells should be drilled in Q4 2015.
A comprehensive overview of our projects can be found
in the Review of Operations section in this Annual Report
and Financial Statements.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 5
BOARD CHANGES
SUMMARY
During the year we welcomed Graham Bull to the Board as
a non-executive director, replacing Martin Durham who left
to fill a full time appointment with Egdon Resources plc. It
is a pleasure to be able to still continue to work with Martin
on our joint projects. Graham is a geologist with 46 years
of international oil and gas industry exploration experience.
Graham has held positions with Chevron, Dome Petroleum,
Siebens Oil and Gas and Poco Exploration.
In addition, Graham has operated as a geological adviser
for EnCore Oil plc, Premier Oil plc, Cirque Energy and
DSM Energy.
I would also like to take this opportunity to thank our
advisers for their support during 2014. In addition, my
thanks go to my fellow Board members Joe O’Farrell,
Graham Bull and Ray Godson.
SHARE CONSOLIDATION
The Board has decided to undertake, subject to shareholder
approval at the forthcoming AGM, a consolidation of
the Company’s share capital so that every 100 existing
ordinary shares of 0.025p will be consolidated into one
new ordinary share of 2.5p (the “Share Consolidation”).
The directors believe that the Share Consolidation will
help further improve the marketability of the Company’s
shares by creating a higher trading price per share which it
is hoped will result in a narrowing of the spread between
the bid and ask market price of the Company’s shares.
The proposal is set out in Resolution 8 in the Notice of
AGM along with an Explanatory Note on the matter.
The results of the Wressle-1 well have to date exceeded
our expectations with all three reservoir objectives
producing hydrocarbons to surface on test and I look
forward to updating shareholders on progress in monetising
the discovery in the coming months. The results of the
EWTs are key to the declaration of commerciality and it
will be interesting to determine the flow rates when under
pump test rather than from non-induced flow tests that
flowed oil and gas to surface.
Looking beyond the Wressle-1 well and confirming
its commerciality we look forward to drilling the high
potential Biscathorpe-2 well located within PEDL253
which resulted from a discovery by BP in respect of
Biscathorpe-1 in 1987. Planning permission has been
granted for the Biscathorpe-2 exploration well and, if
successful, the possible upside for Union Jack is high.
We also continue to evaluate PEDL201 in respect
of the prospectivity of the licence block.
Finally in relation to our existing projects the Board
believes North Kelsey, located on PEDL241, which
has four stacked prospects as targets, provides
several further chances for a successful discovery.
The Company is also seeking other quality projects, with
a focus on UK onshore, in which to become involved as
partners. We remain adequately funded and the future
of Union Jack remains bright.
David Bramhill
Executive Chairman
15 May 2015
BUSINESS AND STRATEGYwww.unionjackoil.com 6
6
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
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.
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 2014 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 £547,256 (2013: £708,920).
The directors do not recommend the payment of a dividend
(2013: nil).
In March 2014, 288,888,889 ordinary shares were issued
for cash at 0.225 pence per share raising £650,000 before
expenses.
In March 2014, shareholders approved a share sub-division
at a General Meeting.
This means that the ordinary shares of 0.25 pence in the
capital of the Company were sub-divided into one new
ordinary share of 0.025 pence, and one deferred share
of 0.225 pence.
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).
In June 2014, 560,284,640 ordinary shares were issued for cash
at 0.25 pence per share raising £1,400,000 before expenses.
In July 2014, 30,900,000 warrants (19,200,000 at 0.25p and
11,700,000 at 0.30p) were exercised generating cash proceeds
of £83,100 for the Company.
In September 2014, 666,666,641 ordinary shares were
issued for cash at 0.3 pence per share raising £2,000,000
before expenses.
In October 2014, 20,000,000 warrants (8,000,000 exercisable
at 0.30p and 12,000,000 exercisable at 0.225p) were exercised
generating cash proceeds of £51,000 for the Company.
In October 2014, a further 19,200,000 warrants were
exercised at a price of 0.30p generating cash proceeds
of £57,600 for the Company.
In October 2014, a further 500,000 warrants were exercised
at a price 0.30p generating cash proceeds of £1,500 for
the Company.
The enlarged issued share capital following the warrant
exercises and issue of new shares described in this section
is 2,418,120,570 ordinary shares of 0.025 pence each.
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.
KEY PERFORMANCE INDICATORS
The Company has made good progress during the year ended
31 December 2014.
The directors were successful in raising funds to ensure the
Company is adequately funded to meet all of its commitments
in respect of licence terms and drilling commitments to the
end of June 2016 and beyond.
In August 2014, the drilling of the Wressle-1 exploration
well resulted in a potential multi-pay zone discovery.
Subsequent testing on three zones has resulted in the flow
of hydrocarbons to surface. The Wressle-1 well will see
Extended Well Testing to determine commerciality in the
near future.
In respect of Biscathorpe-2 and North Kelsey-1 exploration
wells, planning permission has been granted for drilling by
the relevant Councils.
In respect of PEDL201, containing the Burton on the Wolds
prospect, evaluation is continuing on this licence block and
based on this no impairment has been recognised to date.
At this stage it is the Company’s intent to continue operations
until advised otherwise by the operator.
Further key performance indicators will be determined
assuming production commences in 2015.
PRINCIPAL RISKS AND UNCERTAINTIES
As with the majority of companies within the energy sector
the business of oil and gas exploration and development
includes varying degrees of risk. These risks broadly include
operating reliance on third parties, the ability to monetise
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.
Commodity prices will in the future have an impact on
potential revenues and forward investment decisions by
the operator of the projects invested in as the economics
may adversely be affected. However, onshore development
costs are very much lower than offshore developments. The
Company, as it has no production as yet, does not use hedging
facilities. The Company holds adequate Directors’ Insurance
cover and the Company is covered by the operator’s insurance
during drilling and other operational situations. The Board, in
its opinion has mitigated risks as far as reasonably practicable.
The principal risks to the Company as well as the mitigation
actions are set out below:
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 www.unionjackoil.com
BUSINESS AND STRATEGY
7
7
Strategic: A weak or poorly executed development
process fails to create shareholder value
This can be effected by poor selection of exploration projects
where hydrocarbons are not located.
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.
This risk is mitigated through performing a detailed technical
review, both internally by management and externally by
advisers, for each investment which includes a valuation
exercise on the potential return on monies spent. All of the
company’s current project investments are at a stage where
drilling and potential development can be executed within a
relatively short lead time. The amount of interest acquired
in each project is dependent upon the Company’s financial
capability to fulfil its obligation. The Company’s technical
management team is highly skilled with many years industry
experience.
Operational: Operational events can have an
adverse effect
The main risk is the failure to find economic hydrocarbons.
This risk is mitigated by a ongoing review of each project and
maintaining strong relationships with the project operators.
All external technical project meetings are attended by at least
one member of the Union Jack management team and its
results reported to the Board.
External Risk: Lack of growth caused by political,
industry or market factors
The Company operates exclusively within the United
Kingdom (“UK”) and the Board considers that the UK
onshore hydrocarbon arena offers excellent value under
a regime with a very clearly spelt out protocol giving
the opportunity to develop assets unhindered.
As mentioned in this review, oil and gas price volatility
can cause concern, however, onshore developments can
continue as planned in most cases as development costs
are lower than offshore. Lack of control over key assets
is mitigated by the fact that our operator of choice, Egdon,
has a very transparent operating protocol and all partners
are involved, both formally and informally with offering
input to the ongoing development of the projects in which
they are involved. The Company’s in house technical
team is involved at all times and regular technical meetings
are held in which opportunity is given to comment.
Financial Risk: The lack of ability to meet financial
obligations
The main risk is the lack of funds being available to pay for
our future drilling commitments.
All drilling expenditure associated with exploration assets
are forecast and budgeted at least 12 months in advance.
The Company raises its funds through the financial
market by share issues and does not become involved in
derivatives and borrowing to fund its financial obligations.
Further comment in respect of Financial Risk Management
Objectives and Policies, Cash Flow Risk, Credit Risk, and
Liquidity Risk are also covered within this Strategic Report.
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.
CASH FLOW RISK
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.
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.
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
Executive Chairman
15 May 2015
BUSINESS AND STRATEGYwww.unionjackoil.com 8
REVIEW OF OPERATIONS
PEDL180
WRESSLE
UNITED KINGDOM
INTEREST HELD BY
UNION JACK OIL PLC
8.33%
Union Jack holds an 8.33% interest in PEDL180
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.
In July 2014 the Wressle-1
conventional exploration well was
spudded. The Wressle-1 Prospect
was defined on proprietary 3D
seismic data acquired by Egdon in
2012, and the well was drilled as a
deviated well to a total depth (TD)
of 2,240 metres and was designed
to intersect a number of prospective
Upper Carboniferous age sandstone
reservoirs in a structurally favourable
position near the crest of the Wressle
structure. Pre-drill gross mean
Prospective Resources at Wressle as
calculated by Egdon were estimated
to be 2.1 million barrels of oil.
On 23 August 2014 TD was reached
and elevated mud gas readings were
observed over large parts of the
interval from the top of the Penistone
Flags reservoir target (1,831.5 metres
MD – measured depth) to TD.
The well was logged using
measurement whilst drilling (MWD)
logging tools run on the drill string.
Petrophysical evaluation of the
log data indicated the presence of
hydrocarbon pay in three intervals.
Penistone Flags – up to 19.8 metres
measured thickness (15.9 metres
vertical thickness)
Wingfield Flags – up to 5.64 metres
measured thickness (5.1 metres
vertical thickness)
Ashover Grit – up to 6.1 metres
measured thickness (5.8 metres
vertical thickness)
Subsequent to the year end, in
February 2015 shareholders were
updated on the initial successful
Ashover Grit Flow Test which recorded
80 barrels of oil per day (bopd) and
47 thousand cubic feet of gas per day
during a 16 hour main flow period.
No appreciable volumes of water were
observed. The oil is of good quality
with a gravity of 39-40º API.
10km
Gas Field
Oil Field/Discovery
PEDL180
Wressle
Prospect
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 9
Following the Ashover Grit test
shareholders were updated on the
initial successful Wingfield Flags Flow
Test which recorded up to 182 barrels
of oil per day (bopd) of good quality
oil with a gravity of 39-40º API along
with up to 456 thousand cubic feet of
gas per day.
The next horizon to be flow tested was
the Penistone Flags, the last of three
hydrocarbon bearing zones identified in
the well. The Penistone test produced
gas at restricted flow rates of up to
1.7 million cubic feet of gas per day
(mmcfd) with associated oil of up to
12 barrels of oil per day (bopd) and no
free water from a 9 metre perforated
zone at the top of the formation. Gas
flow rates were constrained by the
equipment and flaring limits imposed
by the environmental permit. The gas
and oil are of good quality with the oil
having a gravity of 35º API.
The downhole pressure data recorded
during the testing will now be analysed
to estimate the gas flow rates that
could be achieved under production,
unconstrained by the flare and permit
restrictions.
A further test was carried out to
evaluate the gas-oil and oil-water
contacts in the Penistone Flags by
perforating the formation deeper in
the section. Zone 3a was perforated
over a 7.5 metre interval and
produced good quality oil with a
gravity of 33º API. A total of 98.5
barrels of oil were recovered during
the test (of which flow induced by
swabbing produced 34.3 barrels of
oil). This equates to approximately
77 barrels of oil per day (bopd).
“”
FOLLOWING THE
ASHOVER GRIT TEST
SHAREHOLDERS WERE
UPDATED ON THE INITIAL
SUCCESSFUL WINGFIELD
FLAGS FLOW TEST WHICH
RECORDED UP TO 182
BARRELS OF OIL PER
DAY (BOPD) OF GOOD
QUALITY OIL WITH A
GRAVITY OF 39-40º API.
BUSINESS AND STRATEGYwww.unionjackoil.com 10
REVIEW OF OPERATIONS
“”
THE DOWNHOLE
PRESSURE AND OIL
SAMPLE DATA FROM
ALL TESTS WILL NOW
BE INTERPRETED AND
INTEGRATED INTO
AN UPDATED FIELD
MODEL TO INFORM
FUTURE DEVELOPMENT
PLANNING.
To summarise, the Wressle-1 well
has flowed oil and gas from three
separate reservoirs, the Ashover
Grit, the Wingfield Flags and the
Penistone Flags. The flow test from
Zone 3a has confirmed the presence
of an oil column below the gas leg
in Zone 3 of the Penistone Flags.
The downhole pressure and oil
sample data from all tests will now
be interpreted and integrated into
an updated field model to inform
future development planning.
The next steps in evaluating the
discovery will be to undertake a
pumped Extended Well Test (EWT)
of the Ashover Grit and Penistone
Flags oil intervals to quantify
the production levels that can
be attained during production.
This work is expected to
commence in late May 2015.
The results to date from Wressle-1
are deemed to be very positive
with an un-pumped aggregate gross
production totalling 710 barrels of
oil equivalent per day from all zones.
THE INTERESTS IN PEDL180 ARE HELD BY:
Egdon Resources (operator)
Celtique Energie Petroleum Limited
Europa Oil & Gas Limited
Union Jack Oil
25.00%
33.33%
33.34%
8.33%
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
11
PEDL253
BISCATHORPE
UNITED KINGDOM
INTEREST HELD BY
UNION JACK OIL PLC
10.0%
In March 2013 Union Jack
entered into an agreement
with Egdon, the licence
operator, and Montrose
Industries Limited
(“Montrose”) to acquire
a 10% interest in PEDL253
containing the Biscathorpe
Prospect.
A subsurface 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 surface
objective.
In March 2015, at a Planning and
Regulation Committee Meeting of
Lincolnshire County Council, planning
consent was granted for the drilling
and any subsequent testing of the
Biscathorpe-2 exploration well.
Biscathorpe-2 is planned to be drilled
in Q4 2015. The Board has agreed
in principle to acquire a further 2%
interest in PEDL253.
The mean Prospective Resource
volume for the main reservoir
objective, as calculated by Egdon,
is 17.81 million barrels of oil.
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 initially 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 with a 24 metre
gross sequence. Biscathorpe-2 will
be located in a direction towards a
potentially thicker sand development
within the structural closure of the
trap. The sand unit is predicted to
thicken away from the crest of the
structure and there is also potential
for stratigraphic trapping in the west
which, if present, could increase the
expected total prospective reserves.
The same sand unit is the producing
reservoir in the Egdon operated
Keddington oil field.
THE INTERESTS IN PEDL253 ARE HELD BY:
Egdon Resources (operator)
Montrose
Union Jack Oil
54.0%
36.0%
10.0%
10km
Gas Field
Oil Field/Discovery
PEDL253
Biscathorpe
Prospect
BUSINESS AND STRATEGYwww.unionjackoil.com 12
REVIEW OF OPERATIONS
PEDL201
BURTON ON
THE WOLDS
UNITED KINGDOM
INTEREST HELD BY
UNION JACK OIL PLC
10.0%
In October 2014
drilling operations
were completed on the
Burton on the Wolds-1
exploration well located on
PEDL201 in Leicestershire
and the well was plugged
penetrating only thin sands
in the primary reservoir
objective, the Rempstone
Sandstone group.
Data received during drilling is now
being interpreted in order to evaluate
the future prospectivity of the licence.
The opportunity to interface the
wireline data and fresh cutting samples
has been taken and an international
consultancy is conducting this work
on behalf of the Partnership. This
will assist in the quantification of
the source rock potential and the
unconventional upside that may exist
on the licence.
Prior to drilling, in June 2014 industry
consultants Molten Limited completed
a report commissioned by Union Jack
reviewing the shale resource potential
within PEDL201.
Molten’s review and analysis was
summarised as follows:
• Molten calculates the mean
• Union Jack’s 10% interest of the
mean volumes identified would
amount to approximately 540
million stock tank barrels of oil
initially in place and approximately
270 billion standard cubic feet
of gas initially in place.
• Elsewhere in the world, the
combination of the technologies
of horizontal drilling and hydraulic
fracturing has permitted extensive
shale developments, most notably
in the United States. Although
relatively recent in the history
of the oil and gas industry,
developments such as the Bakken
oil play in the US have been
producing for over 19 years. Shale
oil recovery factors in the US have
ranged from approximately 1% to
nearly 10%.
deterministic un-risked in place
volumes within that shale area of
approximately 5.4 billion barrels
of oil and over 2.7 trillion standard
cubic feet of gas.
•
If recovery factors even at the
low end of those achieved in the
US can be achieved in the UK,
these volumes would represent
significant economic developments.
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%
10km
Gas Field
Oil Field/Discovery
PEDL201
Burton on
the Wolds
Prospect
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 13
PEDL241
NORTH KELSEY
UNITED KINGDOM
INTEREST HELD BY
UNION JACK OIL PLC
10.0%
In March 2013 Union Jack
entered into an agreement
with Egdon, 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.
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 oil
bearing stacked conventional reservoir
intervals in the Chatsworth, Beacon
Hill, Ravensthorpe and Santon
sandstones. The nearby Crosby
Warren oil field and the Brigg oil
discovery are productive from the
Upper Carboniferous Namurian
aged reservoirs.
The gross mean combined
Prospective Resources for these
multiple objectives, as calculated by
Egdon, are estimated to be 6.7 million
barrels of oil.
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.
In December 2014, the Planning
and Regulation Committee of
Lincolnshire County Council granted
planning consent for the drilling and
any subsequent testing of the North
Kelsey-1 well.
Drilling of North Kelsey-1 is targeted
to commence in Q4 2015.
THE INTERESTS IN PEDL241 ARE HELD BY:
Egdon Resources (operator)
Celtique Energie
Union Jack Oil
40.0%
50.0%
10.0%
10km
Gas Field
Oil Field/Discovery
PEDL241
North Kelsey
Prospect
BUSINESS AND STRATEGYwww.unionjackoil.com 14
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
The directors present their report together with the
financial statements for the year ended 31 December 2014.
DIRECTORS
The directors in office at the end of the year, and their
interests in the shares of the Company as at 1 January 2014
and 31 December 2014, were as shown in the table below.
DIRECTORS’ REMUNERATION
The remuneration of the directors for the year ended
31 December 2014 and the year ended 31 December 2013
was as follows:
SALARIES AND FEES
2013
2014
£
£
59,167
29,167
10,416
8,333
–
77,439
62,686
25,000
–
25,000
ORDINARY SHARES
31 December
2014
1 January
2014
D Bramhill
J O’Farrell
R Godson
52,164,580
44,664,580
G Bull
110,164,180
105,664,180
M Durham
14,000,000
12,000,000
D Bramhill
J O’Farrell
R Godson
G Bull
4,000,000
–
Directors’ remuneration is disclosed in note 3 of these
financial statements.
Directors who served during the year and subsequently
are as follows:
David Bramhill (executive director).
Joseph O’Farrell (executive director).
Raymond Godson (non-executive director).
Graham Bull (non-executive director) appointed
15 September 2014.
Martin Durham (non-executive director) resigned
15 September 2014.
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 G Bull 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 25 June 2015 in accordance with the Notice of Annual
General Meeting on page 38. Details of the resolutions to
be passed are included in this notice.
EVENTS AFTER THE BALANCE SHEET DATE
The following event has taken place after the year end:
In January 2015, 280,600,000 warrants issued on 22 July
2013, exercisable at 0.30p, expired and were cancelled
from the Company’s Warrant Register.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
15
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.
DISCLOSURE OF INFORMATION TO THE
AUDITOR
The directors at the date of the approval of this Annual
Report individually confirm that:
In March 2014, shareholders approved a share sub-division
at a General Meeting.
This means that ordinary shares of 0.25 pence in the capital
of the Company were sub-divided into one new ordinary
share of 0.025 pence each, and one deferred share of
0.225 pence.
•
•
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.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the
Companies Act 2006.
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.
On behalf of the Board
David Bramhill
Executive Chairman
15 May 2015
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).
Each new ordinary share carries the right to one vote
at General Meetings of the Company.
There are also warrants in issue as disclosed in note 11.
SUBSTANTIAL SHAREHOLDINGS
On 31 December 2014, the Company’s shareholders’
register showed the following persons holding voting rights
of 3% or more as a shareholder of the Company.
Name of holder
Percentage of No. of ordinary Nature of
holding
voting rights
shares
13.10%
Halifax Share Dealing
9.34%
Hargreaves Lansdown
TD Direct Investing
7.86%
Barclays Stockbrokers Ltd 7.23%
316,870,320
225,825,605
190,095,574
174,897,094
Beneficial
Beneficial
Beneficial
Beneficial
On 15 May 2015, (the latest practical date before
publication of these accounts) the Company’s shareholders’
register showed the following persons holding voting rights
of 3% or more as a shareholder of the Company.
Name of holder
Percentage of No. of ordinary Nature of
holding
voting rights
shares
Halifax Share Dealing
Barclays Stockbrokers Ltd
TD Direct Investing
Pershing International Ltd
10.42%
6.99%
6.65%
5.14%
252,066,695
169,001,421
160,852,137
124,369,361
Beneficial
Beneficial
Beneficial
Beneficial
www.unionjackoil.comGOVERNANCE
16
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
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 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, eight 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 Graham Bull,
who acts as its Chairman, and Ray Godson.
The current executive director remuneration package
comprises basic salary only. Directors’ remuneration
for the year is noted in the Directors’ Report and shown
in note 3 on page 28.
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 Graham Bull. The Committee
is responsible for considering a wide range of financial
matters.
This Committee also provides a forum for reporting
by the Company’s auditor. The executive directors may
attend meetings by invitation.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
DIRECTORS’ RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
17
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.
www.unionjackoil.comGOVERNANCE 18
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 2014 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 2014 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.
Delyth Jones
Senior Statutory Auditor
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Bristol, United Kingdom
15 May 2015
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 19
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
Notes
31.12.14
£
31.12.13
£
Revenue
–
–
Administrative expenses before AIM admission costs
(551,056)
(514,470)
AIM admission costs
–
(199,406)
Total administrative expenses
(551,056)
(713,876)
Operating loss
Finance income
Loss before taxation
Taxation
2
4
5
(551,056)
(713,876)
4,702
5,025
(546,354)
(708,851)
(902)
(69)
Loss for the financial year
(547,256)
(708,920)
Attributable to:
Equity shareholders of the Company
Loss per share
(547,256)
(708,920)
Basic and diluted loss per share (pence)
(0.04)
(0.12)
The accompanying accounting policies and notes form an integral part of these financial statements.
www.unionjackoil.comFINANCIAL STATEMENTS
20
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Loss for the financial year
Other comprehensive income
31.12.14
£
31.12.13
£
(547,256)
–
(708,920)
–
Total comprehensive loss for the financial year
(547,256)
(708,920)
The accompanying accounting policies and notes form an integral part of these financial statements.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
BALANCE SHEET
AS AT 31 DECEMBER 2014
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
21
Notes
31.12.14
£
31.12.13
£
7
8
9
10
832,100
20,000
852,100
33,238
3,474,320
3,507,558
44,294
20,000
64,294
40,673
867,207
907,880
4,359,658
972,174
17
260,974
71,262
260,974
71,262
4,098,684
900,912
2,475,811
3,282,848
349,833
(2,009,808)
2,079,201
–
284,263
(1,462,552)
4,098,684
900,912
Capital and reserves attributable to the
Company’s equity shareholders
Called up share capital
Share premium account
Share-based payments reserve
Retained earnings
Total equity
11
12
12
The financial statements of Union Jack Oil plc, registered number 07497220, were approved and authorised for issue
by the Board of Directors on 15 May 2015 and were signed on its behalf by:
David Bramhill
Director
The accompanying accounting policies and notes form an integral part of these financial statements.
www.unionjackoil.comFINANCIAL STATEMENTS
22
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Share
capital
£
Retained
earnings
£
Share
premium
£
Share-based
payment
reserve
£
Total
£
Balance at 1 January 2013
607,451
(142,573)
Changes in equity
Issue of share capital
Share issue costs
Total comprehensive income
Share-based payment charge
1,471,750
–
–
–
–
(611,059)
(708,920)
–
Balance at 31 December 2013
2,079,201
(1,462,552)
Balance at 1 January 2014
2,079,201
(1,462,552)
–
–
–
–
–
–
–
14,716
479,594
–
–
–
269,547
1,471,750
(611,059)
(708,920)
269,547
284,263
900,912
284,263
900,912
Changes in equity
Issue of share capital
Share issue costs
Total comprehensive income
Share-based payment charge
396,610
–
–
–
–
–
(547,256)
–
3,847,302
(564,454)
–
–
–
–
–
65,570
4,243,912
(564,454)
(547,256)
65,570
Balance at 31 December 2014
2,475,811
(2,009,808)
3,282,848
349,833
4,098,684
The accompanying accounting policies and notes form an integral part of these financial statements.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
23
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
Notes
31.12.14
£
31.12.13
£
Cash flow from operating activities
13
(354,811)
(688,949)
Cash flow from investing activities
Purchase of intangible assets
Purchase of investments
Interest received
(787,806)
–
4,702
(44,294)
(20,000)
5,025
Net cash used in investing activities
(783,104)
(59,269)
Cash flow from financing activities
Proceeds on issue of new shares
Cost of issuing new shares
4,243,912
(498,884)
1,471,750
(341,512)
Net cash generated from financing activities
3,745,028
1,130,238
Net increase in cash and cash equivalents
2,607,113
382,020
Cash and cash equivalents at beginning of financial year
867,207
485,187
Cash and cash equivalents at end of financial year
10
3,474,320
867,207
The accompanying accounting policies and notes form an integral part of these financial statements.
www.unionjackoil.comFINANCIAL STATEMENTS
24
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.
IFRS is subject to amendment and interpretation by
the International Accounting Standards Board (“IASB”)
and the IFRS interpretations Committee, and there
is an ongoing 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 2014.
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 7.
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.
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.
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 whilst exploration and evaluation activities are
continuing, and until the success or otherwise has been
established. The success or failure of each exploration/
evaluation effort will be judged generally on a licence-
by-licence basis. Capitalised costs will be written off on
completion of exploration and evaluation activities unless
the results indicate that hydrocarbon reserves exist and that
these reserves are commercially viable.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 25
PRINCIPAL ACCOUNTING POLICIES
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 an 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.
www.unionjackoil.comFINANCIAL STATEMENTS 26
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.
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:
Amendments to IAS 1
Disclosure Initiative
Amendments to IAS 16 and IAS 38
Clarification of Acceptable Methods of Depreciation
and Amortisation
Annual Improvements to IFRSs: 2012-2014 Cycle
Annual Improvements to IFRSs: 2012-2014 Cycle
Annual Improvements to IFRSs: 2011-13 Cycle
Annual Improvements to IFRSs: 2011-13 Cycle
Annual Improvements to IFRSs: 2010-12 Cycle
Annual Improvements to IFRSs: 2010-12 Cycle
IFRS 9
IFRS 15
Financial Instruments
Revenue from Contracts with Customers
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.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014 27
PRINCIPAL ACCOUNTING POLICIES
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.
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.
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 judgements 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:
Impairment
Management is required to assess the exploration
and evaluation assets for indicators of impairment.
Note 7 discloses the carrying value of the exploration
and evaluation assets.
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. Due diligence is performed at the outset
of the investment before an investment is made. At an
early stage of exploration of each investment the need for
impairment is determined through monitoring market and
industry conditions, competent person reports on each
prospect and information from each licence’s main operator.
In the case of those licences where drilling has commenced
and management is committed to further exploration
and evaluation with sufficient financial resources
available to do so, impairment is not recognised unless
technical analysis confirms that commercially viable
hydrocarbons are insufficient to recover costs incurred.
www.unionjackoil.comFINANCIAL STATEMENTS 28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1
BUSINESS AND OPERATING SEGMENTS
The Company 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
31.12.14
£
31.12.13
£
116,250
206,623
20,000
5,800
–
16,500
4,500
100,000
3
STAFF COSTS
The aggregate payroll cost in the year of the employees, all of whom are directors, was as follows:
Salaries
Social security costs
31.12.14
£
31.12.13
£
107,083
9,167
190,125
16,498
116,250
206,623
The average number of persons employed by the company during the year was 4 (2013: 4).
Details of each director’s remuneration are included in the Directors’ Report.
Highest paid director
The highest paid director received remuneration of £59,167 (2013: £77,439).
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
4
FINANCE INCOME
Bank interest
5
TAXATION
Current tax
UK corporation tax
Adjustment in respect of prior periods
Total UK corporation tax charge
29
31.12.14
£
31.12.13
£
4,702
5,025
31.12.14
£
31.12.13
£
–
902
902
–
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 2013: 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 2013: 62%)
Effects of:
Disallowable expenses
Taxable finance income
Losses carried forward
Adjustment in respect of prior periods
Current tax charge for year
£
£
(546,354)
(708,851)
338,740
439,488
–
2,915
(341,655)
902
902
(141,284)
–
(298,204)
69
69
During the year the Company paid £902 corporation tax on its finance income for the previous year of £5,025.
The Company is not aware of any factors that will materially affect the future tax charge.
A deferred tax asset of £670,729 (2013: £329,074) 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.
www.unionjackoil.comFINANCIAL STATEMENTS
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
6
LOSS PER SHARE
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. At 31 December 2014 the
company has 335,652,548 warrants. 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
2014
Pence
2013
Pence
Loss per share from continuing operations
(0.04)
(0.12)
The loss and weighted average number of ordinary shares used in the calculation of loss per share are as follows:
2014
£
2013
£
Loss used in the calculation of total basic and diluted earnings per share
(547,256)
(708,920)
Number of shares
Number
Number
Weighted average number of ordinary shares for the purposes of basic
and diluted loss per share
1,558,344,760
585,020,400
As detailed in note 11, the Company has 831,680,400 deferred shares. These have not been included within the calculations
of basic 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 currently, on liquidation,
go to the deferred shareholders, hence they are not currently considered subordinate. These deferred shares, being
potential ordinary shares, have not been taken into account when calculating the diluted loss per share as their impact
was anti-dilutive.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
7
INTANGIBLE ASSETS
At 1 January 2014
Costs incurred during the year
At 31 December 2014
8
INVESTMENTS
31
Exploration and
evaluation assets
£
44,294
787,806
832,100
The Company is the beneficial owner of 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 21,387,341 ordinary shares in issue. Union Jack Oil plc
has a 0.425% interest in that company.
9
TRADE AND OTHER RECEIVABLES
VAT
Prepayments
31.12.14
£
31.12.13
£
7,541
25,697
5,122
35,551
33,238
40,673
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.
www.unionjackoil.comFINANCIAL STATEMENTS
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
10
CASH AND CASH EQUIVALENTS
Cash at bank
31.12.14
£
31.12.13
£
3,474,320
867,207
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
31.12.14
£
31.12.13
£
2,418,120,570
(31 December 2013: 831,680,400)
831,680,400
(31 December 2013: Nil)
831,680,400
(31 December 2013: Nil)
Total
Ordinary
0.025p
604,530
–
Ordinary
0.25p
–
2,079,201
Deferred
0.225p
1,871,281
–
2,475,811
2,079,201
Allotments during the year
In March 2014 288,888,889 ordinary shares were issued at 0.225p and in June 2014 560,284,640 ordinary shares were
issued at 0.25p.
Also 666,666,641 ordinary shares were issued by the Company at 0.3p in September 2014.
In addition, warrants for 30,900,000 shares were exercised in July 2014, and in October 2014 warrants for 39,700,000
were exercised.
Issue costs have been recognised in the share premium account. £65,570 of the issue costs was in the form of warrants,
hence there was no cash impact.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
11(b) SHARE-BASED PAYMENTS – WARRANTS
During the year the Company issued further share warrants which are exercisable within five years. Details of the number
of warrants and the weighted average exercise price (WAEP) outstanding during the year are as follows:
Year ended December 2014
Number of warrants
Outstanding at the beginning of the year
Issued in the year
Exercised in the year
348,919,216
57,333,332
(70,600,000)
WAEP
£
0.003
0.003
0.003
Outstanding and exercisable at the end of the year
335,652,548
0.003
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
The fair values of warrants issued were calculated using the Black-Scholes model. The inputs into the model are as follows:
Date of grant
04.12.12
20.12.12
22.07.13
30.07.13
17.03.14
26.09.14
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
Expiry date
6,074,510
0.3p
0.25p
69%
5.0
0.8464%
0%
£11,099
20.12.12
20.12.22
3,644,706 320,000,000
0.25p
0.30p
77%
1.5
1.2064%
0%
£245,655
30.07.13
28.01.15
0.3p
0.25p
69%
2.5
0.8464%
0%
£5,194
20.12.12
20.12.17
19,200,000
0.25p
0.25p
77%
2.5
1.2064%
0%
£22,358
30.07.13
30.07.18
17,333,333
0.225p
0.225p
77%
2.5
0.26%
0%
£22,000
17.03.14
17.03.19
39,999,999
0.225p
0.225p
77%
2.5
0.26%
0%
£43,570
26.09.14
26.09.19
The Company recognised total expenses of £65,570 (year to 31 December 2013: £269,547) 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.
www.unionjackoil.comFINANCIAL STATEMENTS
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
12
RESERVES
At 1 January 2014
Loss for the year
Issue of share capital
Share issue costs (note 11a)
Credit for the year (note 11b)
Retained
earnings
£
Share
premium
£
Share-based
payment
reserve
£
(1,462,552)
(547,256)
–
–
–
–
–
3,847,302
(564,454)
–
284,263
–
–
–
65,570
Totals
£
(1,178,289)
(547,256)
3,847,302
(564,454)
65,570
At 31 December 2014
(2,009,808)
3,282,848
349,833
1,622,873
At 1 January 2013
Loss for the year
Share issue costs (note11a)
Credit for the year (note 11b)
(142,573)
(708,920)
(611,059)
–
At 31 December 2013
(1,462,552)
–
–
–
–
–
14,716
–
–
269,547
(127,857)
(708,920)
(611,059)
269,547
284,263
(1,178,289)
13
RECONCILIATION OF LOSS TO CASH GENERATED FROM OPERATIONS
Loss before taxation
Finance income
Income taxes paid
Decrease / (Increase) in trade and other receivables
Increase in trade and other payables
31.12.14
£
31.12.13
£
(546,354)
(4,702)
(902)
(708,851)
(5,025)
(69)
(551,958)
(713,945)
7,435
189,712
(15,109)
40,105
Cash used in operations
(354,811)
(688,949)
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
14
FINANCIAL INSTRUMENTS
Classification of financial instruments
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 2014 and 31 December 2013
Investments: available-for-sale
The fair value assets are equal to cost.
Financial assets measured at amortised cost
At 31 December 2014
Other receivables
Cash and cash equivalents
Total carrying value
At 31 December 2013
Other receivables
Cash and cash equivalents
Total carrying value
All of the above financial assets’ carrying values approximate to their fair values at 31 December 2014 and
31 December 2013 given their nature and short times to maturity.
Financial liabilities measured at amortised cost
At 31 December 2014
Trade payables
Accruals
Other creditors
Total carrying value
At 31 December 2013
Trade payables
Accruals
Other creditors
Total carrying value
£
20,000
£
7,541
3,474,320
3,481,861
5,122
867,207
872,329
£
15,831
25,800
219,343
260,974
48,762
21,000
1,500
71,262
All of the above financial liabilities’ carrying values approximate to their fair values at 31 December 2014 and
31 December 2013 given their nature and short times to maturity.
www.unionjackoil.comFINANCIAL STATEMENTS
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
15
FINANCIAL INSTRUMENT RISK EXPOSURE AND MANAGEMENT
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 £3,481,861 (2013: £872,329).
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 2014
and 31 December 2013 on the basis of their earliest possible contractual maturity.
At 31 December 2014
Trade payables
Accruals
Other creditors
At 31 December 2013
Trade payables
Accruals
Other creditors
Capital management
Within
2 months
£
Within Greater than
6 months
£
2-6 months
£
Total
£
15,831
25,800
219,343
15,831
–
219,343
–
25,800
–
260,974
235,174
25,800
48,762
21,000
1,500
48,762
–
1,500
–
21,000
–
71,262
50,262
21,000
–
–
–
–
–
–
–
–
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.
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
16
FINANCIAL COMMITMENTS
At 31 December 2014 the Company was committed to its share of Wressle-1 initial testing costs. These costs are expected
to total approximately £120,000.
17
TRADE AND OTHER PAYABLES
Trade payables
Accruals
Other creditors
31.12.14
£
31.12.13
£
15,831
25,800
219,343
48,762
21,000
1,500
260,974
71,262
18
RELATED PARTY TRANSACTIONS
Charnia Resources (UK), an entity owned by Graham Bull, non-executive director, was paid £5,356 in respect
of consulting fees.
Details of key management personnel remuneration are disclosed in the Directors’ Report.
On 24 June 2014 David Bramhill purchased 3,500,000 ordinary shares in the Company at a price of 0.36p settled
in cash at the prevailing price at the time of purchase.
On 24 June 2014 Joe O’Farrell purchased 2,500,000 ordinary shares in the Company at a price of 0.37p settled
in cash at the prevailing price at the time of purchase.
On 30 September 2014 Raymond Godson exercised 2,000,000 warrants at an exercise price of 0.3p.
This transaction was settled in cash.
19
CONTINGENT LIABILITIES
The directors are not aware of any contingent liabilities at 31 December 2014 nor 31 December 2013.
20
EVENTS AFTER THE BALANCE SHEET DATE
The following event has taken place after the year end:
In January 2015, 280,600,000 warrants issued on 22 July 2013, exercisable at 0.30p, expired and were cancelled
from the Company’s Warrant Register.
www.unionjackoil.comFINANCIAL STATEMENTS
38
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 25 June 2015 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 resolutions numbered
7 and 8 will be proposed as special resolutions:
ORDINARY RESOLUTIONS
1 Report and accounts
To receive the audited annual accounts of the Company
for the year ended 31 December 2014, together with
the Directors’ Report and the Auditor’s Report on
those annual accounts.
2 Re-election of director at his first AGM
To re-elect Graham Bull as a director, who offers
himself for re-election in accordance with the
Company’s Articles of Association.
3 Re-election of director retiring by rotation
To re-elect Joseph O’Farrell as a director, who retires
by rotation in accordance with the Company’s Articles
of Association.
4 Re-appointment of auditor
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.
5 Auditor’s remuneration
To authorise the directors to determine the
remuneration of the auditor.
6 Directors’ authority to allot shares
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
£302,265.05 (representing approximately 50% 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 RESOLUTIONS
7 Directors’ power to issue shares for cash
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 £302,265.05
(representing approximately 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.
8 Consolidation of existing ordinary shares
That:
(a) every 100 ordinary shares of 0.025p each in
the capital of the Company (each an “Existing
Ordinary Share”) which, as at 5.30 p.m. on
25 June 2015 (or such other time and date as the
directors of the Company may determine) are
shown in the register of members of the Company
to be in issue, be consolidated into one ordinary
share of 2.5p each (each a “Consolidated
Ordinary Share”), having the same rights as
the Existing Ordinary Shares, provided that:
(i) where such consolidation results in any member
being entitled to a fraction of a Consolidated
Ordinary Share, such fraction shall, so far as
possible, be aggregated with the fractions of
Consolidated Ordinary Shares to which other
members of the Company may be entitled
(each such Consolidated Ordinary Share arising
from the aggregation of such fractions being a
“Fractional Entitlement Share”);
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
NOTICE OF ANNUAL GENERAL MEETING
(ii) the directors be and are authorised to sell
(or to appoint another person to sell) on
behalf of the relevant members, all the
Fractional Entitlement Shares at the best
price then reasonably obtainable to any
person, and to pay the purchase price (net
of expenses) in due proportion among the
relevant members entitled thereto (save
that no amount shall be paid to any member
where the individual amount of net proceeds
to which any member is entitled is less than
£3.00 and any fraction of a penny which would
otherwise be payable shall be rounded up or
down in accordance with the usual practice
of the registrar of the Company); and
(iii) any director (or any person appointed by the
directors) shall be and is hereby authorised
on behalf of all relevant members to execute
an instrument or transfer in respect of such
Fractional Entitlement Shares and to do all acts
and things the directors consider necessary or
expedient to effect the transfer of such shares
to, or in accordance with the directions of, any
buyer of any such shares; and
(b) the Articles of Association of the Company be and
are amended by replacing the existing definition of
“Ordinary Shares” in article 2.1 with:
“Ordinary Shares” means ordinary shares of 2.5
pence each in the capital of the Company.”
By order of the Board
Brian Marshall FCA
Company Secretary
Dated: 15 May 2015
Registered Office:
6 Charlotte Street
Bath BA1 2NE
39
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 6.00 p.m.
on 23 June 2015 (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 23 June 2015.
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.
www.unionjackoil.comANNUAL GENERAL MEETING
40
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2014
EXPLANATORY NOTE FOR CONSOLIDATION
RESOLUTION
The Board has decided to undertake, subject to shareholder
approval at the forthcoming AGM, a consolidation of the
Company’s share capital (the “Consolidation”) so that
every 100 existing ordinary shares of 0.025p (“Existing
Ordinary Shares”)will be consolidated into one new
ordinary share of 2.5p each (“Consolidated Ordinary
Share”). The Directors believe that the Consolidation will
help further improve the marketability of the Company’s
shares by creating a higher trading price per share
which it is hoped will result in a narrowing of the spread
between the bid and ask market price of the Company’s
shares. The proposal is set out in resolution 8 in the
Notice of AGM and further details are set out below.
Upon implementation of the Consolidation, shareholders
on the register of members of the Company at 5.30 p.m.
on 25 June 2015 (the “Record Date”), will exchange
every 100 Existing Ordinary Shares that they hold
for one Consolidated Ordinary Share. As all existing
ordinary shareholdings in the Company are proposed
to be consolidated, the proportion of the issued
ordinary share capital of the Company held by
each shareholder immediately before and after the
Consolidation will, save for fractional entitlements,
remain unchanged. Other than a change in nominal value,
the Consolidated Ordinary Shares will carry equivalent
rights under the Company’s Articles of Association
(the “Articles”) to the Existing Ordinary Shares.
No shareholder will be entitled to a fraction of a
Consolidated Ordinary Share and where, as a result of the
Consolidation, any shareholder would otherwise be entitled
to any fraction of a Consolidated Ordinary Share in respect
of their holding of Existing Ordinary Shares on the Record
Date (a “Fractional Shareholder”), such fractions will
be aggregated with the fractions of Consolidated Ordinary
Shares to which other Fractional Shareholders may be
entitled so as to form full Consolidated Ordinary Shares
(such Consolidated Ordinary Shares arising from the
aggregation of fractions being “Fractional Entitlement
Shares”). In accordance with article 12.1 of the Articles,
the directors will, on behalf of the Fractional Shareholders,
sell such Fractional Entitlement Shares. Based on the closing
mid-market price of 0.23p per Existing Ordinary Share
on 15 May 2015 (being the latest practicable date prior to
publication of this document), the proceeds of sale of
each Fractional Entitlement Share would be 23p and
each Fractional Shareholder would therefore be entitled
to an aggregate amount less than this. The costs that would
be incurred in distributing the proceeds of sale to each
Fractional Shareholder are therefore likely to significantly
exceed the proceeds to which such Fractional Shareholders
would be entitled. Accordingly, such sale proceeds will be
retained for the benefit of the Company in accordance with
the Articles.
Fractional Shareholders will not therefore have a resultant
proportionate shareholding of Consolidated Ordinary
Shares exactly equal to their proportionate holding of
Existing Ordinary Shares. Shareholders holding only a
fractional entitlement to a Consolidated Ordinary Share
(i.e. those shareholders holding fewer than 100 Existing
Ordinary Shares at the Record Date) will cease to be
shareholders of the Company. Such shareholders who
wish to remain a shareholder of the Company following
the Consolidation would therefore need to increase their
shareholding to at least 100 Existing Ordinary Shares prior
to the Record Date. Shareholders in this position are
encouraged to obtain independent financial advice
before taking any action.
In order to facilitate the Consolidation, 30 new Existing
Ordinary Shares will be issued to Graham Bull so that,
immediately prior to the Consolidation, the Company’s
issued share capital will be exactly divisible by 100. Graham
Bull will not as a result of this increase in his shareholding
become entitled to any Consolidated Ordinary Shares over
and above those to which he would be entitled based on his
current shareholding. This is because his interest in the 30
new Existing Ordinary Shares issued will, on completion of
the Consolidation and based on his current shareholding,
become an interest in a fraction of a Consolidated Ordinary
Share. Such fraction will be dealt with in the manner
described above.
The Existing Ordinary Shares have been admitted to CREST.
Application will be made for the Consolidated Ordinary
Shares to be admitted to CREST, all of which may then be
held and transferred by means of CREST. It is expected
that the Consolidated Ordinary Shares arising as a result
of the Consolidation of Existing Ordinary Shares held in
uncertificated form will be credited to CREST accounts
at 8.00 a.m. on 26 June 2015. It is expected that definitive
share certificates in respect of the Consolidated Ordinary
Shares arising as a result of the Consolidation from Existing
Ordinary Shares held in certificated form will be despatched
to relevant shareholders within seven days of the admission
of the Consolidated Ordinary Shares to trading on AIM
(which is expected to occur at 8.00 a.m. on 26 June 2015).
No temporary documents of title will be issued. Share
certificates in respect of Existing Ordinary Shares will cease
to be valid on 26 June 2015 and, pending delivery of share
certificates in respect of Consolidated Ordinary Shares,
dealings will be certified against the register.
The ISIN for the Consolidated Ordinary Shares is
GB00BX90BP30. The SEDOL for the Consolidated
Ordinary Shares is BX90BP3.
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