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Company Altona Energy Plc
TIDM ANR
Headline Final Results
Released 07:00 19-Dec-2017
Number 72133-270B

Final Results

Embargoed until 7am††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††19 December 2017

Altona Energy plc

(?Altona? or ?the Company?)

Final Results

Altona (AIM: ANR), a coal exploration company in South Australia, announces its audited results for the year ended 30 June 2017 and that its Annual General Meeting is to be held at 30 Percy Street, Fitzrovia, London W1T 2DB on Wednesday 10 January 2018 at 11.30 am.

Highlights (post period end)

Nick Lyth, CEO of Altona, commented, ?I am delighted to be able to report to shareholders that Altona has a focused strategy for the identification of suitable coal deposits for conventional extraction and sufficient funding to prosecute the initial phases of the exploration process. †The target is to proceed with exploration only in areas which we believe have a high probability of delivering suitable coal deposits. †In doing so, we de-risk the opportunity with a view to a profitable exit once the necessary exploration phases have been completed. †The reconstituted Board is motivated to deliver this strategy and, in doing so, deliver value to our shareholders.?

For further information, please visit www.altonaenergy.com or contact:

Altona Energy plc
Nicholas Lyth, Chief Executive Officer

+44 7769 906 686
Leander (Financial PR)
Christian Taylor- Wilkinson

+44 7795 168 157
Northland Capital Partners Ltd (Nomad and Broker)
Matthew Johnson / Gerry Beaney (Corporate Finance)
John Howes (Corporate Broking)

+44 20 3861 6625

About Altona Energy

Altona is listed on the London Stock Exchange?s AIM market.† Its principal focus is on the evaluation and development of the Company?s flagship Arckaringa Project to exploit the significant coal resources contained in three exploration licences covering 2,500 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia.† The Project is designed to produce either coal or syngas products for the Australian market and export from an historic resource exceeding 7.8 billion tonnes of coal (1.3 billion tonnes historic JORC (2004) compliant).†

CHIEF EXECUTIVE OFFICER?S STATEMENT

Overview

The Group?s strategy remains focused on its investment in the Arckaringa Project, South Australia, a world class coal resource exceeding 7.8 billion tonnes (1.3 billion tonnes historic JORC compliant) and we continue to have the support of the South Australian Government?s Mining Department, with whom we work closely.

As a result of Altona being unable to secure the necessary Petroleum Exploration Licence (?PEL?) required to pursue an Underground Coal Gasification (?UCG?) strategy, the Board agreed, at the end of reporting period, to refocus on conventional coal extraction methods.† The economics of conventional extraction have improved considerably in the past 22 months as the price of coal has almost doubled in that period.

Therefore, in July 2017, the Group formulated a new strategy with its mining engineering consultants, WSP Australia PTY Ltd (?WSP?); the first step being to identify coal deposits within its three tenements which would be suitable for the new strategy.

Review of the Year

On 28 July 2016, the Group announced that it had been informed by the South Australian Government that in order to commence test drilling for its UCG project at its Arckaringa site it required a PEL.†

Subsequently it was established that an application for the relevant PEL had been made by another company, Linc Energy Limited (?Linc?) which was, at that time, in administration.† The Group made representations to the administrators [and South Australian government] in an attempt to secure this licence for the Group.

On 16 May 2017, the Group announced that Tri-Star Petroleum Company Inc (?Tri-Star?) had acquired the entire assets from the administrator of Linc, including the application for PEL 604, which overlaps the Group?s own tenements. The Group began the process of establishing contact with Tri-Star to establish its intentions for the PEL application.†

As a result of the ongoing PEL application no share capital was issued to the parties referenced in the Joint Venture arrangement and therefore the position remains unchanged from the prior year.

The current licence applications expired in June 2017 and renewal applications have been submitted to the South Australian government. The minimum expenditure commitments in the period were not met. Discussions with the tenement manager have not indicated an issue with licence renewal.

Negotiations ended in early July 2017 with the Group unable to purchase the licence application from Tri-Star.

Post Balance Sheet Events

On 10 August 2017, the Board announced a change in its strategy, following discussions with WSP, to focus on a conventional coal extraction project for the exploitation of its coal assets at Arckaringa.

WSP was engaged to produce a desk top report based on historic data and findings at the three tenements owned by the Group. The report was to establish the existence of ?dry? coal deposits within the Wintinna, Murloocoppie and Westfield tenements, or if found not to be economically viable, then to investigate the probability of low environmental impact ?less dry? or ?wet? coal deposits which could be used for the production of electricity and/or ethanol or methanol. WSP were also tasked with recommending the size of power plant (MW capacity) that would be needed to make the project commercially viable and the coal capacity required.

The Group advised its shareholders on 25 September 2017 that the findings of the report were inconclusive and that a further, more focused report would be needed.† This report was subsequently commissioned, and the Group also engaged the services of Runge Pinock Minarco Global (?RPM?), a specialist professional mining consultant with previous experience of the coal deposits at the Arckaringa site.† Initially, the report was to concentrate on the Group?s Westfield tenement, using seismic, water table and other data to provide accurate analysis and mapping ahead of a possible drilling programme, and on 30 November 2017, the report was expanded to explore areas of the Wintinna and Murloocoppie tenements, which are known to be potentially prospective for accessible coal.

Technical Report

Extensive and thick Permian coal exists in a number of geological basins in South Australia including the Arckaringa Basin.† Permian coals range from being deeply buried in some basins (from 1,110m) to mineable depths (from 30m depth) in the Arckaringa Basin which is the focus of the Group.† The Arckaringa Basin contains an estimated 10 billion tonnes of coals.† Within the basin the Group has control of three deposits (tenements). Historic exploration has revealed the following:†

Wintinna Deposit - Thickness of overburden to top coal seam ranges are 220m to 300m.† Six to seven flat lying coal seams have been delineated, with a cumulative thickness of 20m over a stratigraphic interval of 60m.

Murloocoppie Deposit - Eight persistent seams within a 70m stratigraphic interval are recognised.† Cumulative coal thickness averages 20m with overburden to the top of mineable coal varying between 140m and 230m.

Westfield Deposit - Two persistent seams occur about 30m apart.† The upper seam ranges in thickness from 6m to 9m and occurs at depths between 145m and 215m.† The lower seam averages 1m to 2m in thickness.

Current Group efforts are focused on identifying dry coal or ?less wet? coal at mineable depths.† When the Group has identified coal suitable for extraction, the evaluation of the coal quality and location will inform the Group?s decision making on a ?best return on investment? and low environmental impact basis in respect to the method of extraction.†

Group decisions will also be informed by the infrastructure necessary to process the coal either at surface/on-site or transport coal to market for use elsewhere.† Coal characteristics requiring consideration include coal seam depth, thickness, continuity, maturity, vertical distance to aquifers, organic (maceral) content, gas content indications based on water geochemistry, and coal seam permeability.† In respect of moving coal product to market the three Group tenements are fortunately in close proximity to road and rail (north and south of the continent) transport infrastructure.

The type of extraction and post-extraction use of the coal will be driven by market demand and prices.† It is noted that the price of coal has increased over the last 12 months and appears to be sustainable.† A conventional coal mining technique (as opposed to a non-conventional technique) is most likely to be selected by the Group to undertake the extraction of the coal. In this respect open pit coal mining is the least costly, most timely and least technically problematic. Subjecting the coal to a coal conversion technology (at surface) including gasification to produce one or more products such as oil, diesel, jet fuel, gas, fertilizer and road slurry will all be considered based on their economics. Extracting and transporting the coal to market without processing will also be considered.

Unconventional mining techniques such as Underground Coal Gasification (UCG) and Coal Seam Methane (CSM) are unlikely now to be considered by the Company as they are early stage technologies and subject to a number of environmental and other problems. The Company at this time does not have the licences necessary to explore for coal for these purposes.†††††

Board Changes

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

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

Financial Review

During the period under review the Group made a loss before taxation of £341,000 (2016: profit £38,000, due to a reversal of a provision against a former director?s tax liability of £790,000). Like for like the Group reduced losses by £411,000, mainly due to the decrease in administrative expenses to £341,000 (2016: £765,000).

As at 30 June 2017, the Group had cash of £15,000 (2016: £362,000).†

After the year end, the Group raised £1,095,000 through three separate placings as follows: on 7 July it raised £150,000 at a price of 0.15p per share, on 13 October it raised £210,000 at a price of 0.05p per share, and on 23 November it raised £735,000, before expenses, at a price of 0.5p per share.

Outlook

Altona is a small company with a potentially very large coal asset and the Board is now embarked on a tight and focused strategy to identify and exploit this asset in 2018.† Starting with further exploration in new areas of the tenements for which renewal applications have been made, the Group hopes to take advantage of the high coal price, by proving-up its plan in order to provide a possible exit within a reasonable time frame. The Board will visit Adelaide in January 2018 to meet with the South Australian government and WSP to discuss the exploration programme and planned expenditure for the project.

The Board expects the costs of the initial exploration phase to be kept to a practical level. The Company will work together with WSP to estimate cost levels for a modest open pit mining operation with the capacity to scale-up operations in the future.†

The South Australian region has for some time now, had issues with its regional power supply.† Although there has been a trend towards renewable power in recent years, this is starting to lose momentum as it has not provided the same reliable base load support as fossil fuels are able to do.

Therefore, the Board remains confident that a significant asset such as Arckaringa would be given high priority by the government, who remains supportive of Altona?s project, in order to provide a long-term energy supply for the region.†

Nick Lyth

Chief Executive Officer

18 December 2017

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

For the year ended 30 June 2017

Group
Notes 2017
£?000
2016
£?000
Revenue - -
Administrative expenses (341) † (765)
Reversal of provision - †† 790
Operating (loss) / profit 4 (341) †††† 25
Finance income - 1
(Loss) / profit before taxation (341) †††† 26
Tax credit 7 - †12
(Loss) / profit for the year attributable to the
equity holders of the parent
(341) †††† 38
Other comprehensive income
Exchange differences on translating foreign operations that may be subsequently reclassified to profit or loss 537 †† 1,471
Total comprehensive income attributable to the equity holders of the parent 196 1,509
Earnings per share (expressed in pence per share)
- Basic attributable to the equity holders of the parent

6
(0.04)p 0.005p
- Diluted attributable to the equity holders of the parent 6 (0.04)p 0.005p

All of the above operations during the year are continuing.

STATEMENTS OF FINANCIAL POSITION

As at 30 June 2017

Notes Group
2017
£?000
Group
2016
£?000
Company
2017
£?000
Company
2016
£?000
ASSETS
Non-current assets
Intangible assets 8 11,801 11,221 - -
Investment in subsidiaries 9 - - 1,432 1,432
Other receivables 10 3 3 10,772 10,712
Total non-current assets 11,804 11,224 12,204 12,144
Current assets
Trade and other receivables 10 14 17 13 16
Cash and cash equivalents 15 362 10 357
Total current assets 29 379 23 373
TOTAL ASSETS 11,833 11,603 12,227 12,517
LIABILITIES
Current liabilities
Trade and other payables 11 102 68 95 55
Total current liabilities 102 68 95 55
TOTAL LIABILITIES 102 68 95 55
NET ASSETS 11,731 11,535 12,132 12,462
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 12 892 892 892 892
Share premium 12 18,178 18,178 18,178 18,178
Merger reserve 2,001 2,001 2,001 2,001
Foreign exchange reserve †1,986 1,449 - -
Retained deficit (11,326) (10,985) (8,939) (8,609)
TOTAL EQUITY 11,731 11,535 12,132 12,462

The loss within the parent company financial statements for the year was £330,000 (2016: profit of £1,738,000)

STATEMENTS OF CASH FLOWS

For the year ended 30 June 2017

Group Company
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Cash flows from Operating activities
(Loss)/profit for the year before taxation (341) 26 (330) † 1,738
Income tax - 12 - ††††††† -
Finance income - (1) - †††††† (1)
Share based payments - 18 - ††††† 18
Foreign exchange on loans to controlled entities (43) - - † (1,592)
Decrease in receivables 3 43 3 ††††† 42
Increase/(decrease) in payables 34 (40) 40 (40)
Decrease in provisions - (790) - (790)
Cash used in operations (347) (733) (287) ††† (625)
Income tax benefit received - 63 - -
Net cash used in operating activities (347) (670) (287) †††† (625)
Cash flows from Investing activities
Loans to subsidiaries - - (60) (28)
Interest received - 1 - 1
Net cash generated from/(used in) investing activities - 1 (60) (27)
Cash flows from Financing activities
Proceeds from issue of shares - 500 - 500
Net cash inflow from financing - 500 - 500
Net decrease in cash and cash equivalents (347) (169) (347) (152)
Cash and cash equivalents at beginning of the year 362 543 357 509
Effect of exchange rate changes on cash and cash equivalents - (12) - -
Cash and cash equivalents at 30 June 15 362 10 357

STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 June 2017

Attributable to equity holders of the parent

Share capital Share
Premium
Merger reserve Foreign exchange reserve Retained deficit Total equity
Group £?000 £?000 £?000 £?000 £?000 £?000
As at 1 July 2015 792 17,778 2,001 (22) (11,041) 9,508
Profit for the year - - - - 38 38
Other comprehensive income - - - 1471 - -
Total comprehensive income - - - 1,471 38 †††† 1,509†
Issue of share capital 100 400 - - - 500
Share based payments - - - - 18 18
Total transactions with owners, recognised directly in equity 100 400 - - 18 518
Balance at 30 June 2016 892 18,178 2,001 1,449 (10,985) 11,535
Profit/(loss) for the year - - - - (341) (341)
Other comprehensive income - - - 537 - 537
Total comprehensive income - - - 537 (341) 196
Balance at 30 June 2017 892 18,178 2,001 1,986 (11,326) 11,731

† †

Company £?000 £?000 £?000 £?000 £?000 £?000
Balance at 1 July 2015 792 17,778 2,001 - (10,365) 10,206
Profit for the year - - - - 1,738 ††† 1,738
Other comprehensive income - - - - - -
Total comprehensive income - - - - 1,738 1,738
Issue of share capital 100 400 - - - 500
Share based payments - - - - 18 ††††††† 18
Total transactions with owners, recognised directly in equity 100 400 - - 18 518
Balance at 30 June 2016 892 18,178 2,001 - (8,609) 12,462
Loss for the year - - - - (330) (330)
Other comprehensive income - - - - - -
Total comprehensive income - - - - (330) (330)
Balance at 30 June 2017 892 18,178 2,001 - (8,939) 12,132

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

Reserve Description and Purpose
Share capital Amount subscribed for share capital at nominal value
Share premium Amount subscribed for share capital in excess of nominal value.
Merger reserve Reserve created on issue of shares on acquisition of subsidiaries in prior years.
Foreign exchange reserve Cumulative translation differences of net assets of subsidiaries.
Retained deficit Cumulative net gains and losses recognised in the consolidated statement of comprehensive income

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

  1. ACCOUNTING POLICIES

GENERAL INFORMATION

Altona Energy PLC is a public company which is listed on the Alternative Investment Market (?AIM?) and is incorporated and domiciled in England & Wales, with registered number 05350512.† The Group?s and Parent Company?s financial statements for the year ended 30 June 2017 were authorised for issue by the Board on 18 December 2017 and the Statements of Financial Position were signed on the Board?s behalf by Mr Nicholas Lyth.

The principal activity of the Company during the year was that of a holding company for a group engaged in the identification, evaluation, acquisition and development of the Ackaringa coal project in South Australia.

The principal accounting policies are summarised below. They have been applied consistently throughout the year. The financial statements have been prepared on the historical cost basis.

BASIS OF PREPARATION

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

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

BASIS OF CONSOLIDATION

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

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

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

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

BUSINESS COMBINATIONS

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of a business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree?s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Revised Business Combinations are recognised at their fair values at the acquisition date.

FOREIGN CURRENCIES

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

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

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

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

TAXATION

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

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

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

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

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

INTANGIBLE ASSETS - EXPLORATION AND EVALUATION ASSETS

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

  1. the rights to tenure of the area of interest are current; and
  2. at least one of the following conditions is also met:
    1. the exploration and evaluation expenditure is expected to be recovered through successful development and exploration of the area of interest, or alternatively, by its sale, or
    2. Exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.†

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

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

FINANCIAL ASSETS

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

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

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

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

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

Derecognition

Financial assets

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

FINANCIAL LIABILITIES

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

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

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

Derecognition

Financial liabilities

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

INVESTMENTS IN SUBSIDIARIES

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

MERGER RESERVE

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

SHARE BASED PAYMENTS

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

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

JOINT ARRANGEMENTS

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

The Group classifies its interest in joint arrangements as either:

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

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

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

  1. Impairment of intangibles

The Group follows the guidance of IAS 36 to determine when an intangible asset is impaired. This determination requires significant judgement.† The Group?s current licences for the Arckaringa Project (the Groups? key asset) expired in June 2017 and, whilst renewal applications have been submitted, the renewal process is ongoing and formal notification of their renewal has not yet been received from the South Australia state. Whilst there is no indication at the date of signing these financial statements that these renewals will not be successful, there is no absolute certainty of this. As a result management have exercised their judgement on this matter and continue to carry the intangible assets within the financial statements at the value of historic exploration and evaluation costs. Failure to renew the licences may result in a full impairment of this asset to profit or loss.

2.†† FINANCIAL INSTRUMENTS ? RISK MANAGEMENT

The financial instruments were categorised as follows: Loans and receivables Other financial liabilities at amortised cost Total
Group 30 June 2017 £?000 £?000 £?000
Assets as per statement of financial position
Trade and other receivables 7 - 12
Cash and cash equivalents 15 - 15
27 - 27
Liabilities as per statement of financial position
Trade and other payables - 102 102
- 102 102

† †

Group 30 June 2016 Loans and receivables Other financial liabilities at amortised cost Total
Assets as per statement of financial position £?000 £?000 £?000
Trade and other receivables 2 - 2
Cash and cash equivalents 362 - 362
364 - 364
Liabilities as per statement of financial position
Trade and other payables - 68 68
- 68 68

† †



Company 30 June 2017
Loans and receivables Other financial liabilities at amortised cost Total
Assets as per statement of financial position £?000 £?000 £?000
Trade and other receivables 4 - 9
Cash and cash equivalents 10 - 10
19 - 19
Liabilities as per statement of financial position
Trade and other payables - 95 95
- 95 95

† †



Company 30 June 2016
Loans and receivables Other financial liabilities at amortised cost Total
Assets as per statement of financial position £?000 £?000 £?000
Trade and other receivables 2 - 2
Cash and cash equivalents ††††††††††††† 357 - 357
359 - 359
Liabilities as per statement of financial position
Trade and other payables - 55 55
- 55 55

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

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

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

Credit Risk

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

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

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

Liquidity risk

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

Currency risk

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

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


Foreign currency units to £1.00 GBP
Australian Dollar
At 30 June 2017 1.69
At 30 June 2016 1.78

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

Liabilities Assets
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Australian Dollar 8 14 7 8

The impact of a 20% (2016: 20%) fluctuation in the value of the Australia Dollar would result in net translation gains or losses of £197,187 (2016: £1,200) movement in profit or loss and net assets of the Group.†

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

Assets
2017
£?000
2016
£?000
Australian Dollar 12,204 12,144

A 6% (2016: 20%) fluctuation in the value of the Australian Dollar would result in a positive or negative movement in the Foreign Exchange Reserve of £732,000 (2016: £2,229,000) in relation to the monetary assets above.

Interest rate risk

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

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

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




30 June 2017
Pound Sterling
£?000
Australian Dollar
£?000
Total

£?000
Cash at bank floating interest rate 10 5 15

† †




30 June 2016
Pound Sterling
£?000
Australian Dollar
£?000
Total

£?000
Cash at bank floating interest rate 357 5 362

At the reporting date, cash at bank floating interest rate is accruing weighted average interest of 0.05% (2016: 0.05%) As required by IFRS 7, the Group has estimated the interest rate sensitivity on year end balances and determined that a two percentage point increase or decrease in the interest rate earned on floating rate deposits would have caused a corresponding increase or decrease in net income in the amount of £300 (2016: £7,000).

Capital Management

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

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

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

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

Fair values

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

3.†† REVENUE AND SEGMENTAL INFORMATION

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

During the year ended 30 June 2017 the Group operated in one segment, being the evaluation of the Arckaringa coal project in South Australia.† The Parent Company serves as an administrative head office and is based in the United Kingdom.† During the year ended 30 June 2017 the Group's operations spanned Australia and the United Kingdom.

Segment result Segment result


Continuing operations
2017
£?000
2016
£?000
Coal and Coal to chemicals project (Australia) 10 (109)
Administration and Corporate (United Kingdom) 330 178
340 69
Finance income - 1
Profit/(Loss) before tax 340 70
Income tax credit - † 12
Profit/(Loss) after tax 340 82

The current and prior year share based payment charges are included within the UK segment result.

Segment assets and liabilities

Non-Current Assets Non-Current Liabilities
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Coal and Coal to chemicals project (Australia) 11,804 11,224 - -
Administration and Corporate (United Kingdom) - - - -
Total of all segments 11,804 11,224 - -
Total Assets Total Liabilities
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Coal and Coal to chemicals project (Australia) 11,810 11,229 7 13
Administration and Corporate (United Kingdom) 23 374 95 55
Total of all segments 11,833 11,603 102 68
  1. PROFIT/LOSS FROM OPERATIONS
††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Group
2017
£?000
2016
£?000
This has been arrived at after charging/(crediting):
Fees payable to the Company?s auditor for the audit of the consolidated financial statements 16 16
Fees payable to the Company?s auditor for other services:
Audit of subsidiaries
4 4
Share based payments ? Staff and Directors - 18
Share based payments ? Consultants - -
Staff costs1/(credit) 213 (367)

1†††††† Included in Staff costs in 2016 is a credit for the reversal of the PAYE and national insurance provision. Further details on this provision are included in note 14.

  1. STAFF COSTS (INCLUDING DIRECTORS)
Group Company
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Salaries and fees 210 412 210 412
Release provision for PAYE/NIC - (790) - (790)
Social security costs 3 11 3 11
Total staff costs 213 (367) 213 (367)

The Group and Company averaged 6 employees during the year ended 30 June 2017 (2016: 7 employees). Directors have been assessed as the only key management of the Group.

Short term benefits
Share based payments
National insurance Total
2017 2016
£?000 £?000 £?000 £?000 £?000
Current Directors:
Qinfu Zhang 98 - - 90 187
Phillip Sutherland 27 - - 24 63
Nicholas Lyth 25 - 3 27 40
Chi Ma 25 - - 24 8
Total Key Management 2017 175 - 3 178 -
Total Key Management 2016 278 17 3 - 298

The total amount payable to the highest paid director in respect of emoluments was £90,000 (2016: £187,000).† No Directors exercised any share options during the year.† The pension expense relates to compulsory superannuation in Australia.

  1. EARNINGS PER SHARE

The loss for the year attributed to shareholders is £341,000 (2016: profit £38,000).

This is divided by the weighted average number of Ordinary shares outstanding calculated to be 891.9 million (2016: 835.1 million) to give a basic loss per share of 0.04 pence (2016: basic earnings per share of 0.005 pence).

In the current and prior year there were no potentially dilutive ordinary shares at the year end because the share price at year end was below the strike price of the potentially dilutive options and warrants.† The potential future share issues that may dilute the profit/(loss) per share relate to options in issue disclosed at note 16.

  1. †TAX
Group
2017
£?000
2016
£?000
Current taxation
Tax credit
Deferred taxation
-
-
12
-
Total tax credit - 12
Factors affecting the tax charge for the year
(Loss)/profit on ordinary activities before tax (341) 38
Loss on ordinary activities at the Group standard rate of 20.09% (2016: 22.40%) (69) 9
Effects of:
Non-deductible expenses - †† (5)
Difference in overseas tax rates - (8)
Tax concession (research & development) - 12
Tax losses (utilised)/ carried forward 69 4
Total tax credit for the year - 12

† †

Unprovided deferred tax asset:
Group tax losses carried forward of £19,209,000 (2016: £18,868,000) multiplied by the standard rate of corporation tax 20.09% (2016: 22.40%) are recognised when it is probable that sufficient taxable profit will be available in the foreseeable future. In view of the uncertainty as to future profits, no deferred tax asset has been recognised as at 30 June 2017 (30 June 2016: nil) due to uncertainty as to when profits will be generated.

3,841


3,773

Changes in tax rates and factors affecting the future tax charge

The Finance Act 2016 includes legislation reducing the main rate of UK corporation tax from 20% to 19% from 1 April 2017.

  1. INTANGIBLE ASSETS†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††
Group
2017
£?000
2016
£?000
Exploration and evaluation
Cost
At beginning of year 11,221 9,739
Currency translation adjustment 580 1,482
Carrying value at 30 June 11,801 11,221

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

During the year under review, the joint venture company has not issued shares to the joint venture partners as these partners have not met their capital contribution requirements obligations.† Accordingly at the year-end Altona continued to own 100% of the shares in the joint venture Company.† Because the shares had not yet been issued to partners as at 30 June 2017, management consider that the appropriate accounting is to treat the joint arrangement as a joint operation.

Potential impairment

Intangible assets relate solely to the Arckaringa coal project. Before work can commence at this project the Exploration Licence must be renewed. In the event that this is unsuccessful, there may be an indication of impairment of capitalised expenditure which could significantly reduce the carrying amount of this asset. As at the date of signing the Financial Statements the Exploration Licenses are in the process of being renewed following their expiry in June 2017. However, this delay between expiration and renewal has been normal for the Company in previous years and as such the Directors do not propose any impairment to the Intangible Assets. Moreover, the Group has recently undertaken a new strategy, starting with the commissioning of further coal studies to realise value of the licences.† †

  1. INVESTMENTS IN SUBSIDIARIES
Company
2017
£?000
2016
£?000
Cost
Investments in subsidiaries ? opening and closing balance
1,432 1,432

† †


Subsidiaries of Altona Energy Plc

Country of Registration

Holding

Nature of Business
2017
%
2016
%
Direct
Altona Australia Pty Ltd Australia 100 100 Dormant holding Company
Indirect
Arckaringa Energy Pty Ltd Australia 100 100 Prior year evaluation of the Arckaringa Project
Arckaringa Coal Chemical Joint Venture Co Pty Ltd Australia 100 100 Current year evaluation of the Arckaringa Project
  1. TRADE AND OTHER RECEIVABLES
Group Company
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Current
Taxes & Social security receivable 5 7 4 7
Prepayments and other receivables (i) 9 10 9 9
14 17 13 16

† †

Non-current
Loans due from Group companies (ii) - - 10,772 10,712
Tenement bond 3 3 - -
3 3 10,772 10,712
  1. Other receivables are non-interest bearing and generally repayable between 30-60 days. Included within other receivables is an amount for rent deposit which is refundable upon expiry of the lease.
  2. The loans to wholly owned subsidiaries are non-interest bearing and are repayable on demand, however payment is not anticipated to be within one year.

The other receivables remain within their contractual maturity at 30 June 2017 (30 June 2016).

  1. TRADE AND OTHER PAYABLES
Group Company
2017
£?000
2016
£?000
2017
£?000
2016
£?000
Trade payables 66 37 66 31
Accruals and other payables 36 31 29 24
102 68 95 55

Trade and other payables are non-interest bearing and are normally settled on terms of 30 days from month end.† The trade and other payables remain within their contractual maturity at 30 June 2017 and 30 June 2016.

  1. SHARE CAPITAL
Group Company
Allotted, called up and fully paid 2017
£?000
2016
£?000
2017
£?000
2016
£?000
891,956,853 ordinary shares of 0.1p each (2016: 891,956,853) 892 892 892 892
  1. SHARE-BASED PAYMENTS

The Company periodically grants share options to employees, consultants and Directors, as approved by the Board.† At 30 June 2017 and 30 June 2016, the following share options were outstanding in respect of the ordinary shares:

Year ended 30 June 2017

Grant Date Expiry Date Number of Options Outstanding at beginning of the year Issued in Year Forfeited / Expired / Cancelled Exercised in Year Number of Options Outstanding at end of the year Exercise Price per Option
28.01.13 28.01.18 4,515,000 - - - 4,515,000 1.50p1
01.04.16 01.04.21 6,500,000 - - - 6,500,000 1.50p3
01.04.16 01.04.21 6,500,000 - - - 6,500,000 1.50p3
17,515,000 - - - 17,515,000

Year ended 30 June 2016

Grant Date Expiry Date Number of Options Outstanding at beginning of the year Issued in Year Forfeited / Expired / Cancelled Exercised in Year Number of Options Outstanding at end of the year Exercise Price per Option
28.01.13 28.01.18 4,515,000 - - - 4,515,000 1.50p1
08.04.13 08.04.16 4,500,000 - (4,500,000) - - 1.56p1
28.03.14 28.03.19 5,750,000 - (5,750,000) - - 1.50p2
28.03.14 28.03.19 5,750,000 - (5,750,000) - - 3.00p2
01.04.16 01.04.21 - 6,500,000 - - 6,500,000 1.50p3
01.04.16 01.04.21 - 6,500,000 - - 6,500,000 1.50p3
20,515,000 13,000,0000 (16,000,000) - 17,515,000

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

†††††††† 2 ? these options were subject to certain vesting conditions but were cancelled in the prior year.

†††††††† 3 ? The first 6,500,000 options vest on the first anniversary after the date of grant and the second 6,500,000 vests on the second anniversary of the date of grant.

The weighted average contractual life of share options outstanding at the end of the period was 3.75 years (2016: 3.9 years).

The highest and lowest market price of the Company?s shares during the year was 0.825p and 0.325p respectively (2016: 0.275p and 1.3p). The share price at year end was 0.425p (2016: 0.75p).

  1. COMMITMENTS AND CONTINGENT LIABILITIES

As at 30 June 2017, the Group had the following material exploration commitments:

The Group has three exploration tenements in South Australia. The exploration commitments relating to EL 5677 Wintinna, to EL 5676 Westfield and to EL 5677 Murloocoppie. These exploration commitments are held by the joint venture company. These licenses expired in June 2017 and are in the process of being renewed.† Under its joint venture agreement the Group expects that the exploration commitments of the licences will continue to be met by the joint venture company in the coming financial year. The total commitment under the new licenses is not yet determined. Under the previous licenses it was AUD2,760,000.

The Company has filed a defence to a claim brought by a former director, who claims £225,000 plus interest and costs. The claim concerns a settlement agreement entered into in 2014. The Company maintains that the claimant breached the agreement, and is not entitled to the sum claimed. The Company has issued a counterclaim for approximately £30,000 regarding costs incurred in mitigating the effects of the claimant?s actions whilst a director, and also seeks a costs indemnity. No trial date has yet been fixed by the court.

  1. RELATED PARTY TRANSACTIONS

The key management personnel are considered to be the Directors. Details of their remuneration are included in Note 6 to the financial statements.

  1. CONTROLLING PARTY

The directors consider that there is no controlling party.

  1. POST REPORTING DATE EVENTS

On 7 July 2017 the Company issued 100,000,000 new ordinary shares of 0.01p per share by way of a placing, at a price of 0.15p per share raising gross proceeds of £150,000.

On 13 October 2017 the Company issued 420,000,000 new ordinary shares of 0.01p per share by way of a placing, at a price of 0.05p per share raising gross proceeds of £210,000.

On 3 November 2017 the Company appointed Mr Henry Kloepper as a Non-Executive Director.

On 22 November 2017 the Company issued 147,000,000 new ordinary shares of 0.01p per share by way of a placing, at a price of 0.5p per share raising gross proceeds of £735,000.

On the same day the Company appointed previously Non-Executive Directors, Nick Lyth and Phil Sutherland to the Executive Board as CEO and COO respectively.

In addition the Company granted options over a total of 270,000,000 ordinary shares to Qingfu Zhang (Chairman), Nick Lyth (CEO), Phil Sutherland (COO), and Ma Chi (Non-Executive Director). The options have a variety of stipulations attached but focus predominantly on share price performance and operational performance.

-ends-


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