Final Audited Results

RNS Number : 3979Q

BPC Ltd

09 April 2009

 



Date:                       9 April 2008

On behalf of:           BPC Limited ('BPC' or 'the Company')

Embargoed until:    0700hrs

BPC Limited ('the Company')

Final audited results for the year ended 31 December 2008

BPC Limited, formerly named Falkland Gold and Minerals Limited, the oil and gas exploration company with licences in The Bahamas, is pleased to announce its final audited results for the year ended 31 December 2008. 

Highlights:

• Applications for further exploration licences in The Bahamas submitted
• Ongoing farm-out negotiations for these and our existing five exploration licences
• Comprehensive geological and geophysical studies have been undertaken during the first 20 months of the licences to 31 December, 2008
• Cash reserves on deposit in Australia in a government guaranteed form with the National Australia Bank, principally in US$ and no debt
• Tax residency migrated from UK to Jersey and costs reduced
• Completion of reverse acquisition of Falkland Gold and Minerals Limited, change of name to BPC Limited and readmission to trading on AIM

Commenting on the results, Alan Burns, Chairman and CEO of BPC Limited, said:

'2008 has been a significant year for BPC. Having successfully completed the reverse acquisition of Falkland Gold and Minerals Limited in September 2008, the Board and Management's focus has centred on negotiating farm-outs in the near future, meanwhile ensuring that all obligations under the existing licences are met or exceeded.'

For more information please contact:

BPC Limited

Alan Burns, Chairman and CEO                             [phone]

Ambrian Partners Limited (Nominated Adviser)

Marc Cramsie                                                          [phone] 

Redleaf Communications                                     [e-mail]

Samantha Robbins / Rebecca Sanders-Hewett    [phone] 

  CHAIRMAN'S REPORT

We are not alone in experiencing the effects of the current global downturn, however, I am pleased to report we have made good progress during the year. We have been busy locating and processing a considerable amount of previous oil company data that hitherto had been 'lost'. This data has shed new light on potential in new areas in The Bahamas and applications have been lodged for licences over these new areas.  We are currently engaged on farm-out negotiations with regard to these and our existing licences.

BPC has cash reserves on deposit in Australia in a Government guaranteed form with the National Australia Bank, principally in US$ and has no debt. Although BPC is in a satisfactory condition to take its projects forward whilst the international markets recover over the next few years, the next six to twelve months will be a critical time for the Group for obtaining partners and in the oil business generally.

With regard to the reporting of a matter of material uncertainty in note 2.1 to the financial statements, I am satisfied that this gives our shareholders appropriate disclosure.

In the meantime, we have migrated the tax residency of the holding company from the UK to Jersey owing to the fact that the Company conducts no business activities in the UK and all of its petroleum activities are in the Commonwealth of The Bahamas. The opportunity has therefore arisen to reduce costs by a reduction in the number of directors and in streamlining the overhead structure by staff reductions. As a result, effective 1 April 2009, two non-executive directors, Robert Carroll and Timothy Jones resigned and I wish to thank them for their great contribution. 

The remaining non-executive directors are Mark Savage and Michael Proffitt who will make up the Audit and Remuneration Committees. Michael Proffitt has been appointed Finance Director. Alan Burns, Michael Proffitt and Mark Savage will comprise the Nomination Committee.  

Most of our ongoing costs, including legal and travel, are associated with negotiations with potential partners and in keeping the Government of The Bahamas informed of our progress in analysing the data we are recovering.

I would like to thank our shareholders, staff, consultants and directors for their efforts during the year which have set us in a sound condition for potential growth.

Alan Burns

Chairman

REVIEW OF OPERATIONS

2008 has been a significant year for BPC. Having successfully completed the reverse acquisition of Falkland Gold and Minerals Limited on 1 September 2008, the Board and Management's focus has centred on negotiating farm-outs in the near future, meanwhile ensuring that all obligations under the existing licences are met or exceeded.

The Licences

BPC Limited ('BPC') was granted five exploration licences on 26 April, 2007, totalling over 3.8 million acres (~ 5000 sq miles). BPC holds 100% interest in the licences through Island Offshore Petroleum Limited (Miami Licence) and Bahamas Offshore Petroleum Limited (Bain, Cooper, Donaldson and Eneas Licences), both Bahamian registered subsidiary companies. In addition, BPC has lodged applications with the government for additional exploration licences in August 2008 and is awaiting the government's review of these applications.

Expenditure to 31 December, 2008 

BPC's first year exploration work program (closing April 2008) commitment for five licences was US$450,000 and US$600,000 for second year exploration (closing April 2009). BPC's realised total work programme capital expenditure for the first year and to December 31, 2008 was US$2,836,837. As a result, BPC has already exceeded its first two years' work commitment by US$1,786,837. 

Work Completed

BPC undertook comprehensive geological and geophysical studies during the first 20 months of the licences to 31 December, 2008. The staff evaluated historical data gathered from oil companies and University archives from localities in northern Wales, London, Texas and Florida, and retrieved original rock data uncovered in a core storage facility in New Orleans that was ravaged by Hurricane Katrina in 2005.  

More than thirty consultants and BPC employees have been focused on analysing and interpreting thousands of pages of historical geological and geophysical documents, seismic and well log file data, and original well bore rock samples.  Parts of the historical data set (pre-1987) had to be scanned, digitised and converted into a modern data set in order to apply 2007-2008 computer software and computer hardware platform systems. Pre-1987 geological and geophysical exploration data were analysed using paper data, including well and seismic data. Modern computer technology has advanced in 20 years, and hence necessitated that the historical data be converted to a modern computer framework. More than 25 new geological and geophysical studies were completed to the end of December, 2008. 

Extensive evaluation was also conducted in forecasting exploration risk, market economics and geological production facilities to ensure project commerciality. Consultants and University industrial programs were also used to evaluate geological and geophysical data sets. BPC supported research programs at three leading US universities during and preceding Year 1: the University of Miami Comparative Sedimentology Laboratory, which is the leading research group on the geology of the Bahamas and Cretaceous reservoir systems; the Bureau of Economic Geology (BEG), University of Texas at Austin is renowned for its global experience in Jurassic and Cretaceous reservoir systems; and the University of Utah Energy and Geoscience Institute which specialises in global exploration and environmental monitoring. These leading university programs combined with the BPC team and contractors have established BPC as a leader in exploration and development studies for the Bahamas, the Caribbean and related global projects.

BPC's expertise has been realised by the super-major and major petroleum companies, and farm-in discussions to enlist one or several companies to partner in the exploration venture are ongoing. This is receiving the full attention of BPC's technical staff.

Exploration Background

Over sixty years of sporadic exploration has been conducted in The Bahamas beginning in 1945. Exploration licences were granted to 16 companies during this period, the most recent being awarded to BPC. However, there has been very little exploration and drilling activity, with no drilling in the last 20 years, and much of the seismic acquisition activity occurred more than 20 years ago.  

Five deep petroleum exploration wells have been drilled onshore or in Bahamian waters. By 1947, following the major discoveries in carbonate reservoir systems of West Texas, Mexico and the Middle East, companies were searching for similar unexplored provinces. The oil rush to The Bahamas led to eight active licences, including those held by Gulf, Standard Oil, BP, Superior Oil and Shell Exploration. Superior Oil Company drilled Andros Island-1 in 1947 on the island primarily as a stratigraphic test. Over the next two decades, Gulf, BP, Shell, Chevron and Sun were the principal operators, and seismic was recorded in 1953-54, 1961 and 1964. Cay Sal-1 was drilled in 1959 by Gulf. Additional seismic was acquired in the years up to 1972, and two further wells were drilled. A joint venture of Gulf, Chevron and Mobil drilled Long Island-1 in 1970, and Chevron drilled the Great Isaac-1 well in 1971.

A gap in exploration activity followed until changes in petroleum legislation in 1982. The acquisition of a speculative survey by GSI renewed interest in the Santaren Channel. Subsequently, Getty was awarded two licences in 1982 (Bimini and south Andros Island area), and Natomas was awarded a licence to the southwest of the Getty Andros Island concession. Natomas and Getty acquired experimental seismic data in 1982-83, along with a follow-up program in 1983-84. ARCO completed a seismic survey on its licence in 1985. ARCO was subsequently taken over by Pecten (Shell). Getty opted not to drill a well following their takeover by Texaco, and that licence expired in 1985. Tenneco acquired licences and drilled the Doubloon Saxon-1 well in the southwestern Bahamas in 1985-86. 

Kerr McGee Bahamas Ltd. and Atlantic Exploration and Production Co. was the most recent operator that was awarded an exploration program in The Bahamas. The Group announced in June 2003 that it had acquired 100% interest in nine oil and gas licences offshore The Bahamas. The licences, located in the Blake Plateau basin about 100 miles north of Freeport, Grand Bahamas Island, cover 6.5 million acres in water depths ranging from 650 feet to more than 7,000 feet. The area lies north of Little Bahama Bank and lacks the large-scale structural folds that occur in BPC's licences.

BPC Limited was awarded five licences in April, 2007 totalling just over 3.8 million acres. Four of the licences are in the southern Bahamas in the area previously held by Tenneco, and one licence is north of Bimini where previously Chevron drilled the Great Isaac well. 

In addition to the five wells drilled in The Bahamas, over 7000 kilometers of seismic data was acquired in The Bahamas prior to BPC being awarded their licences. No modern seismic data has been acquired in the area of BPC's licences.

Summary of Progress

BPC has completed more than 25 technical studies to December 31, 2008. These studies included technical analysis of geological and geophysical data. The expenditure for these studies and associated work was US$2,836,837. 

BPC's 20 months of technical studies were designed and executed in order to provide an exploration framework for the licensed areas and programs for seismic acquisition have been evaluated. Farm-out discussions with several companies are underway.

Dr Paul Crevello

Chief Operating Officer

  BPC LIMITED

31 December 2008

Consolidated income statement
			31 December  2008 12 months Group	31 December  2007 12 months Group
	Note		$	$
Finance income			57,492	86,358
Finance costs	4		(86,500)	-
Employee benefits expense	5		(1,092,552)	(1,280,171)
Depreciation and amortisation expense			(84,090)	(63,105)
Loss on disposal of fixed assets			(495)	-
Impairment of goodwill			(233,351)	-
Other expenses	6		(2,121,839)	(2,202,090)
Loss before income tax			(3,561,335)	(3,459,008)
Income tax expense	7		_________ -	_________ -
Loss for the year			(3,561,335)	(3,459,008)
Attributable to:
Equity holders of BPC Limited			(3,561,335)	(3,459,008)
Earnings per share for loss attributable to the ordinary equity holders of the company:			$	$
Basic earnings per share	8		(0.0049)	(0.0055)
Diluted earnings per share	8		(0.0049)	(0.0055)

BPC LIMITED

31 December 2008

Consolidated balance sheet
		31 December  2008 Group	31 December  2007 Group
	Note	$	$
ASSETS
Nonߛcurrent assets
Cash not available for use	9	1,204,616	1,103,474
Property, plant and equipment		117,277	191,016
Exploration and evaluation assets	10	4,055,587	3,185,179
		5,377,480	4,479,669
Current assets
Cash and cash equivalents		3,004,451	675,711
Trade and other receivables		507,393	515,782
		3,511,844	1,191,493
Total assets		8,889,324	5,671,162
LIABILITIES
Current liabilities
Trade and other payables		541,382	764,982
		541,382	764,982
Total liabilities		541,382	764,982
EQUITY
Ordinary Shares		28,764	1,118,700
Share premium reserve		73,634,186	11,871,197
Reverse acquisition reserve		(53,846,526)	-
Share based payments reserve		300,139	253,799
Other reserves		125,298	(4,932)
Retained earnings		(11,893,919)	(8,332,584)
Total equity		8,347,942	4,906,180
Total equity and liabilities		8,889,324	5,671,162

  BPC LIMITED

31 December 2008

Consolidated statement of changes in equity

	Share capital	Share premium	Reverse Acquisition Reserve	Share based payments	Other reserves	Retained earnings	Total equity
	$	$	$	$	$	$	$
Balance at 1 January 2007	9,195,000	_______-		12,151	______ -	(4,873,576)	4,333,575
Currency translation differences	_______ -	_______ -		__  __-	(4,932)	________-	(4,932)
Net income recognised directly in equity	_______-	_______-		_____-	(4,932)	________ -	(4,932)
Loss for the period	_______-	_______ -		_____ -	_____ -	(3,459,008)	(3,459,008)
Total recognised income and expense for the period	_______-	_______ -		_____ -	(4,932)	(3,459,008)	(3,463,940)
Issue of share capital	1,654,997	1,000,000		-	-	-	2,654,997
Employee share option scheme: value of employee services	-	-		241,648	-	-	241,648
Share capital reorganisation following share exchange	(9,764,997)	9,764,997		-	-	-	-
Options exercised	12,000	108,000		-	-	-	120,000
Issue of share capital	21,700	998,200		_____ -	_____-	_____ -	1,019,900
Balance at 31 December 2007	1,118,700	11,871,197		253,799	(4,932)	(8,332,584)	4,906,180
Balance at 1 January 2008	1,118,700	11,871,197		253,799	(4,932)	(8,332,584)	4,906,180
Currency translation differences	______ -	______  -		______-	130,230	________ -	130,230
Net income recognised directly in equity	______-	______ -		______-	130,230	________-	130,230
Loss for the period	______ -	______-		______-	______ -	(3,561,335)	(3,561,335)
Total recognised income and expense for the period	______ -	______-		______-	130,230	(3,561,335)	(3,431,105)
Employee share option scheme: value of employee services	-	-		28,126	-	-	28,126
Options exercised	66,950	702,550		______-	______-	________  -	769,500
Balance at 31 December 2008	1,185,650	12,573,747		281,925	125,298	(11,893,919)	8,347,942
BPC Limited (formerly FGML)
Balance at 1 January 2008 arising in legacy BPC Jersey Limited	-	-	-	281,925	125,298	(8,332,584)	(7,925,361)
Loss for the period	-	-	-	-	-	(3,561,335)	(3,561,335)
Shares prior to acquisition	2,850	18,594,187		-	-	-	18,597,037
Issue of share capital on business combination	25,914	55,039,999	(53,846,526)	-	-	-	1,219,387
Share options - value of services	_______-	_______ -	______   -	18,214	___    -	________ -	__ 18,214
Balance at 31 December 2008	28,764	73,634,186	(53,846,526)	300,139	125,298	(11,893,919)	8,347,942

BPC LIMITED

31 December 2008

Consolidated cash flow statement
		31 December  2008 Group	31 December  2007 Group
	Note	$	$
Cash flows from operating activities
Payments to suppliers and employees	11	(2,930,809)	(3,067,691)
Net cash used in operating activities		(2,930,809)	(3,067,691)
Cash flows from investing activities
Payments for property, plant and equipment		(12,921)	(242,943)
Proceeds from sale of property, plant and equipment		2,076	-
Payments for exploration and evaluation assets	10	(870,408)	(1,607,027)
Deposits for bank guarantees	9	(101,142)	(1,103,474)
Interest received		57,492	__86,358
Net cash used in investing activities		(924,903)	(2,867,086)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		6,826,527	3,794,897
Interest paid	4	(86,500)	_______ -
Net cash generated from financing activities		6,740,027	3,794,897
Net increase/(decrease) in cash and cash equivalents		2,884,315	(2,139,880)
Cash and cash equivalents at the beginning of the period		675,711	2,834,665
Effects of exchange rate changes on cash and cash equivalents		(555,575)	(19,074)
Cash and cash equivalents at end of period		3,004,451	675,711

  BPC LIMITED

31 December 2008

Notes to the consolidated financial statements

1.     General information

BPC Limited ('the company') and its subsidiaries (together 'the operating group') is the holder of several oil and gas exploration licences issued by the Government of the Commonwealth of The Bahamas.

The company is a limited liability company incorporated and domiciled in The Falkland Islands. The address of its registered office is 56 John Street, Stanley, The Falkland Islands.

The company has one directly and four indirectly 100% owned subsidiaries as follows:

Name Country of Incorporation Holding BPC Jersey Limited (name changed from BPC Limited on 11 September 2008) Jersey 100% Direct BPC Limited ('BPC Limited (Bahamas)') Bahamas 100% Indirect Bahamas Offshore Petroleum Ltd Bahamas 100% Indirect Island Offshore Petroleum Ltd Bahamas 100% Indirect BPC Perth Pty Ltd Australia 100% Indirect The names of the directors in office at any time during or since the end of the year are: Alan Burns Chairman and Chief Executive Officer Paul Crevello Director and Chief Operating Officer Mark Savage Non Executive Director Michael Proffitt Finance Director Timothy Jones Non Executive Director Resigned 1 April 2009 Robert Carroll Non Executive Director Resigned 1 April 2009

The directors continue in office to the date of this report unless otherwise stated.

The loss of the company for the year ended 31 December 2008 amounted to $3,561,335 (31 December 2007: $3,459,008) arising from the group's expenditure in administering the five oil and gas exploration licences.  

The sources of liquidity for the group during 2008 have been equity placements, bank interest and the bank and cash balances acquired as a result of the reverse acquisition of FGML. Prior to 1 September 2008 the sources of liquidity have been equity placements and bank interest.  It is the intention of the group that the main source of liquidity for operations and commitments for the next twelve months will be existing cash balances.

These group consolidated financial statements were authorised for issue by the Board of Directors on 8 April 2009.

2.     Summary of significant account policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.  

  2.1     Basis of preparation

The consolidated financial statements of BPC Limited reflect the results and financial position of the Group for the 12 month period to 31 December 2008.  

These financial statements of BPC Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) and have been prepared under the historical cost convention. 

Under IFRS 3, the directors must identify the 'acquirer' and 'acquiree' under any business combination. On 1 September 2008, BPC Jersey Limited became the acquirer of Falkland Gold and Minerals Limited ('FGML'), although FGML is the legal parent of the new group. As BPC Jersey Limited is the acquirer, these consolidated accounts show the results of the BPC group incorporating FGML's results from 1 September 2008. The comparatives for 2007 are those of the BPC Jersey Ltd group only and do not include any of the FGML balances.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Operating Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3.

Going concern

These financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as and when they fall due for the foreseeable future.

The Directors have prepared cash flow forecasts that indicate that the Group will be able to meet its financial obligations through to the second quarter of 2010 from its existing liquid cash resources.

 Additional cash resources may become available to the Group as a result of negotiations currently in hand with the Government of The Bahamas to reduce the level of performance guarantees deposited at Barclays Bank following the group's satisfaction of required expenditure commitments under its licences.

However, the Group's ability to meet its obligations beyond this period is dependent on either further fund raising or the agreement of a farm-out arrangement of the Group's licences. Negotiations are currently in hand with third parties which, if successfully concluded, will provide additional funding and/or contributions to exploration expenditure under joint venture arrangements. 

The Directors have concluded that, as they have yet to reach agreement with third parties in relation to potential additional fundraising/farm-out transactions, there exists a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern. Nevertheless after making enquiries, and considering the uncertainties described above, the Directors have concluded that it is appropriate to continue to adopt the going concern basis when preparing these accounts. Our auditors, PricewaterhouseCoopers LLP, have included a matter of emphasis paragraph in respect of this material uncertainty in their audit report.

a) Standards, amendments and interpretations which became effective in 2008

• IFRIC 12, 'Service concession arrangements' (effective from 1 January 2008). IFRIC 12 is not relevant to the group's operations because none of the group's companies provide for public sector services.

• IFRIC 13, 'Customer loyalty programmes' (effective from 1 July 2008). IFRIC 13 is not relevant to the group's operations because none of the group's companies operate any loyalty programmes.

• IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction' (effective from 1 January 2008). IFRIC is not relevant to the group's operations the group does not operate any defined benefit scheme. 

• IFRIC 16. 'Hedges of a net investment in a foreign operation' (effective from 1 October 2008). IFRIC 16 is not relevant to the group's operation because none of the group's companies undertake hedges.

b) Standards, amendments and interpretations to existing standards that are not yet effective but have been early adopted by the group

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the group's accounting periods beginning on or after 1 January 2009 or later periods, but the group has early adopted them:

• IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). IAS 23 removes the option to expense all borrowing costs.

c) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the group's accounting periods beginning on or after 1 January 2009 or later periods, but the group has not early adopted them;

• IFRS 2 (revised) 'Share-based payments' (effective from 1 January 2009). The amendments to IFRS 2 clarify the definition of vesting conditions and the accounting treatment of cancellations by the counterparty to a share-based arrangement.

• IFRS 3 (revised) 'Business combinations' (effective from 1 July 2009). There are some significant amendments to IFRS 3, none of which are considered to impact on the results or net assets of the group had the revised standard been adopted early by the group during the period.

• IFRS 8 'Operating Segments' (effective from 1 January 2009). IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, 'Disclosures about segments of an enterprise and related information'. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The group will apply IFRS 8 from 1 January 2009 but it is currently not applicable to the group as there is only one reporting segment used by management at this stage.

• IAS 1 (revised) 'Presentation of financial statements' (effective from 1 January 2009). The amendments to IAS1 relate to revised requirements for presentation of some financial statements, and revised terminology throughout.

• IAS 27 (revised) 'Consolidated and Separate Financial Statements' (effective from 1 July 2009). The amendments to IAS 27 relate to partial disposals of subsidiaries, associates and joint ventures, and attributing income to the non-controlling interest.

• IAS 32 (revised) 'Financial instruments; Presentation' (effective from 1 January 2009). In February 2008, the IASB issued amendments to IAS 32 and IAS 1(2007) Presentation of Financial Statements on Puttable Financial Instruments and Obligations Arising on Liquidation. The objective of the amendments is to improve the financial reporting of particular types of financial instruments that meet the definition of a financial liability but represent the residual interest in the net assets of the entity. 

• IFRIC 15, 'Agreements for construction real estates'. IFRIC 15 is not relevant to the group's operations because none of the group's companies operate in real estates.

2.2     Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. The interest of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interest's proportionate share of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, non-controlling interests consist of the amount attributed to such interests at initial recognition and the non-controlling interest's share of changes in equity since the date of the combination.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.

All intra-group transactions, balances, income and expenses (including unrealised gains and losses on transactions between group companies) are eliminated on consolidation.

3    Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

3.1  Critical accounting estimates and assumptions

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions 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.

  (a) Going concern

These financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as and when they fall due for the foreseeable future.

The Directors have prepared cash flow forecasts that indicate that the Group will be able to meet its financial obligations through to the second quarter of 2010 from its existing liquid cash resources.

 Additional cash resources may become available to the Group as a result of negotiations currently in hand with the Government of The Bahamas to reduce the level of performance guarantees deposited at Barclays Bank following the group's satisfaction of required expenditure commitments under its licences.

However, the Group's ability to meet its obligations beyond this period is dependent on either further fund raising or the agreement of a farm-out arrangement of the Group's licences. Negotiations are currently in hand with third parties which, if successfully concluded, will provide additional funding and/or contributions to exploration expenditure under joint venture arrangements. 

The Directors have concluded that, as they have yet to reach agreement with third parties in relation to potential additional fundraising/farm-out transactions, there exists a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern. Nevertheless after making enquiries, and considering the uncertainties described above, the Directors have concluded that it is appropriate to continue to adopt the going concern basis when preparing these accounts.

  (b) Carrying value of exploration expenditure

Expenditure of $4,055,587 relating to the cost of exploration licences, geological and geophysical consultancy has been carried forward on the balance sheet at 31 December 2008 (31 December 2007: $3,185,179).  

The consultancy expenditure incurred related to the gathering of historical data and the commencement of interpretation of this data.

Ultimate recoupment of exploration and evaluation assets carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas.

  (c) Prepayments

Prepayments comprise application fees paid to the Government of the Bahamas for additional exploration licences, pending award. In the event that the group's applications are unsuccessful 50% of this amount is refundable to the group.

No provision has been made in the accounts to write down the carrying value of these prepayments in the event that the applications are unsuccessful.

4     Finance Costs

	31 December 2008 Group	31 December 2007 Group
	$	$
Interest paid on convertible loan notes	86,500	____  -

On 1 April 2008 the Company entered into a Loan note investment agreement with RAB Special Situations (Master) Fund Limited and a Loan note instrument in order to raise US$1,500,000 through the issue of 1,500,000 unsecured convertible loan notes of $1 each.

US$1,500,000 was raised through the issue of loan notes to RAB, directors, and companies nominated by directors during April 2008. Interest was payable on the loan notes at 1% per calendar month.

The loan notes could be redeemed by the Company at any time after 30 April 2008 or by the note holder after the exit date, being 31 October 2008. The notes could instead be converted into ordinary shares by the noteholder on or after 1 July 2008 at the lower of $0.576 per share and a 20% discount to the price at which a placement or sale of the Company occurs.

On 19 September 2008 all the loan notes issued were redeemed in full. The total amount repaid was $1,586,500 representing $1,500,000 principal and $86,500 interest.

5.    Employee benefit expense

	31 December 2008 Group	31 December 2007 Group
	$	$
Wages and salaries	1,030,417	989,447
Share options granted to directors and employees	28,126	241,648
Social security costs	2,884	2,884
Pension costs -defined contribution	17,321	10,909
Other staff costs	13,804	35,283
	1,092,552	1,280,171
Number of employees	10	10
Average number of employees
Split between:
Executives	4	4
Non-executive	4	4
Administrative	______ 2	______ 2
Total	_____10	_____10

6.    Other expenses

	31 December 2008 Group	31 December 2007 Group
	$	$
Travel and accommodation	527,062	586,588
Operating lease payments - other	66,400	64,900
Legal and professional	715,306	393,493
Auditors' remuneration	75,132	30,000
Net foreign exchange losses	555,575	19,074
Capital raising costs written off	-	821,454
Other	182,364	286,581
Total other expenses	2,121,839	2,202,090

7.     Income tax

Until 31 December 2008 the Company was resident in both the UK and the Falkland Islands for tax purposes. Following the reverse takeover on 1 September 2008 all UK based operations and activities have ceased and therefore the Company has migrated its tax residency to Jersey, effective 31 December 2008. This migration is subject to HMRC approval and a bank guarantee of £75,000 (equivalent to $108,594 as at 31 December 2008) has been provided to HMRC pending finalisation of any remaining tax liability. The Directors are of the opinion that the final tax liability will be £nil.  

The Company's 100% directly held subsidiary, BPC Jersey Limited, has obtained Jersey exempt company status for the year under Article 123A of the Income Tax (Jersey) law 1961, as amended, and is therefore exempt from Jersey income tax on non Jersey source income and bank interest (by concession). A £600 annual exempt company has been paid by the Company in April 2008 and this amount is included within 'other' in note 6. From 31 December 2008 the exempt company status terminates and under the revised law the Company is treated as a zero rated company, and will pay no Jersey income tax.

The Company's 100% indirectly held subsidiary, BPC Perth Pty Ltd, is tax resident in Australia. 

All other group companies are within a tax free jurisdiction, that of the Bahamas. Under current Bahamas law, the company is not required to pay taxes in the Bahamas on Income or capital gains.

	31 December 2008 Group	31 December 2007 Group
	$	$
(i) The charge for the year is made up as follows:
- Bahamas corporation tax (at 0%)	______ -	______ -
- Taxation imposed outside Bahamas	______ -	______ -

The Australian subsidiary is in a tax loss position and hence has not recognised any income tax expense for the period. Deferred income tax assets have not been brought to account, as it is not probable within the immediate future that tax profits will be available against which deductible temporary differences can be utilised. The deferred income tax amounts are as follows:

	31 December 2008 Group	31 December 2007 Group
	$	$
The deferred tax asset is made up of the following estimated net tax benefit:
- tax losses	92,248	58,300
- temporary differences	50,333	(49,971)
Net unrecognised deferred tax asset	142,581	_ 8,329

8.     Earnings per share

(a) Basic

Basic loss per share is calculated by dividing the loss attributable to equity holders of the company by the weighted average number of ordinary shares on issue during the year.

	31 December 2008 Group	31 December 2007 Group
Loss attributable to equity holders of the company	$(3,561,335)	$(3,459,008)
Weighted average number of ordinary shares in issue	734,205,111	627,514,188
Basic loss per share ($ per share)	$(0.0049)	$(0.0055)

  (b) Diluted

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company has one category of dilutive potential ordinary shares: share options. For these share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

	31 December 2008 Group	31 December 2007 Group
Loss attributable to equity holders of the company	$(3,561,335)	$(3,459,008)
Weighted average number of ordinary shares in issue	734,205,111	627,514,188
- Share options not included in calculation due to anti-dilutive effect	9,140,421	47,075,507
- Weighted average number of ordinary shares for diluted earnings per share	734,345,952	674,589,695
Basic loss per share ($ per share)	$(0.0049)	$(0.0055)

  9.    Cash not available for use

	31 December 2008 Group	31 December 2007 Group
	$	$
Bank deposit (a)	1,051,796	1,050,000
Bank deposit (b)	44,226	53,474
Bank deposit (c)	108,594	______ -
	1,204,616	1,103,474

(a)  Bank Deposit

Bank deposit held as security for performance guarantees issued by Barclays Bank Plc to the Treasury of the Government of the Bahamas in respect of the 5 exploration licences held by the group. It is to be held to their maturity on 20 January 2010 and carries an interest rate of 0.1% (2007: 3%).

(b)  Bank Deposit

Bank deposit held as security by National Australia Bank in respect of company credit cards. The deposit carries an interest rate of 8% until maturity on 3 February 2009 (2007: 6.9%).

(c)  Bank Deposit

Bank deposit held as security by Barclays Bank Plc as security for bank guarantee provided to HMRC. The guarantee was required to be in place prior to migrating the UK tax residency of the Company. It is to be held for a period of one year from filing of the final UK tax return. The deposit carries an interest rate of 0.1%.

10.    Intangible assets

Group	Goodwill	Exploration Licences*	Geological, Geophysical and Technical Analysis*	Total
	$	$	$	$
Year ended 31 December 2007
Opening net book amount	-	787,500	790,652	1,578,152
Additions	______ -	_____-	1,607,027	1,607,027
Closing net book amount	______ -	787,500	2,397,679	3,185,179
At 31 December 2007
Net book amount	_____ -	787,500	2,397,679	3,185,179
Year ended 31 December 2008
Opening net book amount	-	787,500	2,397,679	3,185,179
Additions	233,351	431,250	439,158	1,103,759
Impairment charge **	(233,351)	______-	______ -	(233,351)
Closing net book amount	______ -	1,218,750	2,836,837	4,055,587
At 31 December 2008
Net book amount	______ -	1,218,750	2,836,837	4,055,587

*Exploration and evaluation assets

Ultimate recoupment of exploration and evaluation assets carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas.

**Impairment charge

The carrying value of the goodwill initially recognised upon the reverse acquisition of FGML on 1 September 2008 has been reduced to zero through the recognition of an impairment loss against goodwill. This loss has been recognised as a separate line item in the income statement.

11.     Cash generated from operations

	31 December 2008 Group	31 December 2007 Group
	$	$
Loss before income tax	(3,561,335)	(3,459,008)
Adjustments for:
- Depreciation	84,090	63,105
- Loss on disposal of property, plant & equipment	494	-
- Share based payment	46,340	241,648
- Finance income	(57,492)	(86,358)
- Finance costs	86,500	-
- Foreign exchange losses on operating activities	555,575	19,074
- Foreign exchange differences arising on consolidation	130,230	(4,932)
Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation)
- Trade and other receivables	8,389	(195,103)
- Trade and other payables	(223,600)	353,883
Cash generated from operations	(2,930,809)	(3,067,691)

12.    Annual Report

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985.

The consolidated balance sheet at 31 December 2008, consolidated income statement, consolidated cash flow statement, consolidated statement of changes in equity and associated notes for the year then ended, have been extracted from the Group's financial statements upon which the auditors opinion is unqualified and does not include any statement under section 237 of the Companies Act 1985.

The Company's annual report will be posted to shareholders on 5 May 2009 and will be available on the Company's website at www.bpcltdgroup.com as of this date.  

13.    Annual General Meeting

The Annual General Meeting of the Company will be held on 4 June 2009. Full details will be included with the published Annual Report and Financial Statements.

 

END

 

 

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