Final results and Annual Report and Accounts

Mercom Oil Sands plc

("Mercom" or "the Company")

Final Results for the year ended 31 March 2014

Mercom Oil Sands plc announces its final results for the year ended 31 March 2014.

Chairman's Statement

I am pleased to present my Chairman's Statement and the Company's Annual Report for the year ended 31 March 2014.

In the Interim Report accompanying the half-year results to 30 September 2013, I reported that the Board had concluded that the merits of the transaction agreed with Nordic Petroleum ASA ("Nordic") had been overtaken by subsequent events. The Company sought to negotiate a revision to the terms of the Farm-in Agreement, and I reported that after the Interim Accounts were closed it had reached a full and final out of court settlement with Nordic. This included an agreement to issue Nordic 12,954,545 Ordinary shares in the Company.

In October 2013, the Company announced that it had issued 200,000,000 Ordinary shares at 0.3p per Ordinary share, raising an additional £600,000 of equity.

The resolution of the Nordic arbitration had created clarity, and the Board felt ready to move forward with renewed confidence. On 16 January 2014 the Company announced that it had appointed Northland Capital Partners Limited as its nominated advisor and broker. This was followed by the appointment on 20 March 2014 of Lorraine Young as Company Secretary and the Company's registered office changed to 190 High Street, Tonbridge, Kent TN9 1BE.

The Group had cash reserves of £1,417,000 at the year end, after corporate expenses of £480,000 had been incurred during the year.

On 7 May 2014 the Company's shareholders approved a resolution to amend the Company's investing policy. Subsequently, after undertaking due diligence, it was able to announce a range of investments on 29 May 2014, after the end of the accounting period, and as a result the Group now holds investments totalling £768,000 on its balance sheet. This consists of:

· £400,000 invested for a 30% interest in Lion Natural Resources PLC, which holds investments in two companies with projects in Sierra Leone and Kenya;

· £300,000 invested for a 35% interest in NWT Coal Limited, an unquoted company with two coal concessions in Vietnam; and

· £68,000 invested in 7% convertible debentures of Maverick Petroleum Limited an oil company with a focus in the Republic of Chad.

On 16 July 2014, the Company announced a capital reorganisation which will facilitate future investment decisions, and places the Company in a position to implement its investment strategy with increasing confidence.

Dr Patrick Cross

Chairman

30 September 2014

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2014

Consolidated Statement of Financial Position

as at 31 March 2014

Consolidated Statement of Cash Flows

for the year ended 31 March 2014

Consolidated Statement of Changes in Equity

for the year ended 31 March 2014

Notes to the Consolidated Financial Statements

1. BASIS OF PRESENTATION

Basis of presentation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and adopted by the European Union.

Basis of consolidation

The Group financial statements include the financial statements of the Company and its subsidiary undertaking Mercom Oil Sands Canada Inc., a company incorporated in Canada. The results of subsidiary undertakings sold or acquired are included in the Consolidated Statement of Comprehensive Income up to, or from the date control passes. Intra group sales and profits are eliminated fully on consolidation.

Comparative figures

The comparatives are for the period from incorporation on 12 February 2012 to 31 March 2013.

Functional currency

The presentational and functional currency of the Group and Company is U.K Sterling.

Significant accounting estimates and judgments

The preparation of these financial statements requires management to make judgments and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgments and estimates. The financial statements include judgments and estimates which, by their nature, are uncertain. The impacts of such judgments and estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognised in the period in which the estimate is revised and the revision affects both current and future periods.

Significant assumptions about the future and other sources of judgments and estimates that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

· Management's position that there are no income tax considerations required within these audited financial statements; and

· The carrying value of trade and other receivables.

Going concern

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assume that the Company will be able to realise its assets and discharge its liabilities in the normal course of operations. The Company has no current source of operating revenues and its capacity to operate as a going concern in the near-term will likely depend on its ability to continue raising equity or debt financing. There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realise on its assets and discharge its liabilities in the normal course of business, the net realisable value of its assets may be materially less than the amounts recorded in the Consolidated and Company Statements of Financial Position. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

2. SIGNIFICANT ACCOUNTING POLICIES

Exploration and evaluation assets

(i) Capitalised costs

Exploration and evaluation expenditures include the costs of maintaining licenses, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Before legal rights to explore an area are obtained, exploration and evaluation expenditures are expensed as incurred. Expenditures associated with the acquisition of exploration and evaluation assets through a business combination or asset acquisition are capitalised and recognised as assets. Exploration and evaluation costs incurred thereafter are capitalised. Capitalised costs, including general and administrative costs, are only allocated to the asset to the extent that these costs can be related directly to operational activities in the relevant area of interest where it is considered likely to be recoverable by future exploitation or sale, or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Costs of extending agreements are not capitalised.

(ii) Depletion and amortisation

Capitalised costs related to each cost centre from which there is production will be depleted using the unit-of-production method based on proved petroleum and natural gas reserves, as determined by independent consulting engineers. The cost of significant development projects and undeveloped properties will be excluded from costs subject to depletion until it is determined whether or not proved reserves are attributable to the properties or impairment has occurred. Estimated future costs to be incurred in developing proved reserves will be included and estimated salvage values are excluded from costs subject to depletion. In cost centers from which there has been no production, certain costs will not be subject to depletion until commercial production commences. No depletion has been calculated.

(iii) Impairment

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

(iv) Asset retirement obligations

Asset retirement obligations include present obligations where the Group will be required to retire tangible long-lived assets such as producing well sites and facilities. The asset retirement obligation is measured at the present value of the expenditure expected to be incurred using a risk-free discount rate. The associated asset retirement cost is capitalised as part of the cost of the related long-lived asset. Changes in the estimated obligation resulting from revisions to estimated timing, amount of cash flows, or changes in the discount rate are recognised as a change in the asset retirement obligation and the related asset retirement cost. Increases in asset retirement obligations resulting from the passage of time are recorded as accretion of asset retirement obligation in the statement of operations. The Group has not recognised any asset retirement obligations as of 31 March 2014.

Investments

Fixed asset investments are stated at cost less amounts written off.

Corporation tax

Corporation tax on the profit or loss for the period presented comprises current and deferred tax. Corporation tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the period end.

Deferred tax is recorded using the asset and liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not-deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting or taxable loss; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the period end date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. To the extent that the Group does not consider it probable that a future tax asset will be recovered, the tax asset is not recognised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit with banks and short-term interest-bearing investments with maturities of 90 days or less from the original date of acquisition. Cash and cash equivalents are recorded at fair value and changes in fair value would be reflected in the Consolidated Statement of Comprehensive Income.

Warrants

Warrants issued to consultants are accounted for using the fair value method and result in share issue costs and a credit to the warrants reserve when the warrants are issued. When warrants are exercised, the corresponding warrant fair value and the proceeds received by the Group are credited to share capital. When warrants expire, the corresponding fair value is credited to accumulated deficit.

Loss per share

Basic loss per share is calculated using the weighted average number of shares outstanding. Diluted loss per share assumes that any proceeds from the exercise of dilutive stock options and warrants would be used to repurchase Ordinary shares at the average market price during the period, with the incremental number of shares being included in the denominator of the diluted earnings per share calculation. 

During the year ended 31 March 2014, all issued and outstanding warrants and options were anti-dilutive and were excluded from the diluted loss per share calculations.

Foreign currency translation

The functional and presentational currency of the Group is U.K Sterling. Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on dates of transactions. At each period end date monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to U.K Sterling at the exchange rate at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income. Non-monetary assets and liabilities that are measured at historical cost are translated using the exchange rate at the date of the transaction.

Impairment of non-financial assets

At each period end date, non-financial assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

An asset's recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognised immediately as additional depreciation. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognised. A reversal is recognised as a reduction in the depreciation charge for the period.

Share issue costs

Costs incurred for the issue of Ordinary shares are deducted from the share premium arising on that issue.

Revenue recognition

Revenue from the sale of petroleum and natural gas is recognised when the risks and rewards of ownership pass to the purchaser, including delivery of the product, the selling price is fixed or determinable and collection is reasonably assured. Oil and natural gas royalty revenue is recognised when received.

Financial Instruments

Financial assets

The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the Consolidated and Company Statements of Financial Position at fair value with changes in fair value recognised in the Consolidated Statement of Comprehensive Income.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity. These assets are measured at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognised in the Consolidated Statement of Comprehensive Income.

Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for-sale. They are carried at fair value with changes in fair value recognised directly in equity. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognised in profit or loss.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described above.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the Consolidated and Company Statements of Financial Position at fair value with changes in fair value recognised in the Consolidated Statement of Income.

Other financial liabilities - This category includes promissory notes, amounts due to related parties and accounts payables and accrued liabilities, all of which are recognised at amortised cost.

The Group's financial instruments consist of the following:

Cash and cash equivalents Loans and receivables

Other receivables Loans and receivables

Accounts payable and accrued liabilities Other financial liabilities

Future accounting changes

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period beginning 1 April 2013 and have not been early adopted:

· IFRS 9, 'Financial instruments', issued in November 2009 and effective from 1 January 2015. IFRS 9 represents the first phase of the IASB's project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. It sets out the classification and measurement criteria for financial assets and liabilities and requires all financial assets, including assets currently classified under IAS 39 as available for sale, to be measured at fair value through profit and loss unless the assets can be classified as held at amortised cost. Qualifying equity investments held at fair value may have their fair value changes taken through other comprehensive income by election.

· IAS 19 - Employee Benefits ("IAS 19") was amended by the IASB in November 2013 to simplify the accounting for contributions from employees or third parties to defined benefit plans that are independent of the number of years of service. The amendments to IAS 19 are effective for annual periods beginning on or after 1 July 2014. 

· IAS 32 - Financial Instruments: Presentation ("IAS 32") was amended by the IASB in December 2011 to clarify certain aspects of the requirements on offsetting. The amendments focus on the criterion that an entity currently has a legally enforceable right to set off the recognized amounts and the criterion that an entity intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The amendments to IAS 32 are effective for annual periods beginning on or after 1 January 2014.

· IAS 36 - Impairments of Assets ("IAS 36") was amended by the IASB in May 2013 to clarify the requirements to disclose the recoverable amounts of impaired assets and require additional disclosures about the measurement of impaired assets when the recoverable amount is based on fair value less costs of disposal, including the discount rate when a present value technique is used to measure the recoverable amount. The amendments to IAS 36 are effective for annual periods beginning on or after 1 January 2014. 

· IAS 39 - Financial Instruments: Recognition and Measurement ("IAS 39") was amended by the IASB in June 2013 to clarify that novation of a hedging derivative to a clearing counterparty as a consequence of laws or regulations or the introduction of laws or regulations does not terminate hedge accounting. The amendments to IAS 39 are effective for annual periods beginning on or after 1 January 2014. 

· IFRIC 21 - Levies ("IFRIC 21") was issued in May 2013. IFRIC 21 provides guidance on the accounting for levies within the scope of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets ("IAS 37"). IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event ("obligating event"). IFRIC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. IFRIC 21 is effective for annual periods commencing on or after 1 January 2014. 

Current accounting changes

· During 2013, the Company adopted a number of new IFRS standards, interpretations, amendments and improvements to existing standards. These included IFRS 10, IFRS 11, IFRS 12, IFRS 13, and IAS 1. These new standards and changes did not have any material impact on the Company's financial statements.

3. CAPITAL AND FINANCIAL RISK MANAGEMENT

The capital of the Group consists of shareholders' equity. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain optimal returns to shareholders and benefits for other stakeholders.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue new shares or debt, dispose of assets, or adjust the amount of cash and cash equivalents.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable. There were no changes in the Group's approach to capital management during the year ended 31 March 2014. The Group is not subject to externally imposed capital requirements.

Credit risk

All the Group's cash and cash equivalents are held with well-known and established financial institutions. As such, management considers credit risk related to these financial assets to be minimal. The Group's maximum credit risk exposure is limited to the carrying value of its cash and subscriptions receivable. At 31 March 2014, the Group had no material amounts deemed to be uncollectible.

Commodity price risk

Commodity price risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in oil and natural gas commodity prices. The nature of the Group's operations will result in exposure to fluctuations in commodity prices. The Group is currently in its development stage and as such the exposure to fluctuations in commodity prices is not actively managed. In the future, the Group may use commodity price contracts to manage exposure to fluctuations in pricing.

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Group does not have a material exposure to this risk as there are no outstanding debt facilities.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they come due. The Group ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Group's reputation.

The Group utilises authorisation for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources.

Foreign currency risk

The Group is exposed to foreign currency fluctuations on its cash which is denominated in U.K. Sterling and Canadian Dollars.

4. LOSS BEFORE TAXATION

5. EXCEPTIONAL ITEM

On 28 November 2013, the Company finalised an out of court settlement with Nordic Petroleum ASA with regard with its dispute over the Farm-in agreement. The Company agreed to pay a cash sum, together with the issue of 12,954,545 Ordinary shares in the Company, to Nordic Petroleum ASA in full and final settlement of the dispute.

6. EMPLOYEES

7. TAXATION

8. LOSS OF THE PARENT COMPANY

9. INVESTMENTS

10. EXPLORATION AND EVALUATION ASSETS

11. TRADE AND OTHER RECEIVABLES

12. TRADE AND OTHER PAYABLES

13. RELATED PARTY TRANSACTIONS AND BALANCES

The Group's and Company's related parties, as defined by International Accounting Standard 24 (revised), the nature of the relationship and the amount of transactions with them during the year ended 31 March 2014 were as follows:

The Group and Company were charged £24,000 (2013: £22,000) in consulting fees by CFO Advantage Inc., a company that is controlled by K. Appleby (Finance Director). As at 31 March 2014 the Group and Company owed CFO Advantage Inc. £nil (2013: £2,000).

The Group and Company were charged £14,700 (2013: £38,500) in consulting fees by AT Investments SA and £nil (2013: £11,650) by Intellego Limited, companies of which A.E. Taubi (Non-executive Director) is a director. The Group and Company also reimbursed AT Investments SA £1,100 (2013: £125,450) for expenses incurred on behalf of the Group. At 31 March 2014 the Group and Company owed AT Investments SA £1,750 (2013: £nil).

The Group and Company were charged £26,000 (2013: £21,000) in consulting fees by Dr P.H. Cross (Non-executive Chairman).

The Group and Company were charged £30,000 (2013: £nil) in consulting fees by J. Zorbas (Chief Executive Officer). The Group and Company reimbursed Caveliaco Ltd £nil (2013:£45,059) for expenses incurred on behalf of the Group. J. Zorbas is a director of Caveliaco Ltd. The Group and Company also reimbursed J. Zorbas £nil (2013:£32,000) for expenses incurred on behalf of the Group.

On 28 November 2013, the Company finalised an out of court settlement with Nordic Petroleum ASA with regard with its dispute over the Farm-in agreement. The Company agreed to pay a cash sum, together with the issue of 12,954,545 Ordinary shares in the Company, to Nordic Petroleum ASA in full and final settlement of the dispute.

14. SHARE CAPITAL

The fair value of the warrants issued during the year ended 31 March 2014, was estimated at £62,000 using the Black-Scholes option pricing model with the following assumptions:

Risk free interest rate 1.08 %

Expected dividend yield nil

Expected volatility 100 %

Expected life 3 years

Option pricing models require the input of subjective assumptions regarding the expected volatility. Volatility is difficult to ascertain given that the company is still in the development stage, therefore it has been set at 100%. Changes in assumptions can materially affect the estimate of fair value, and therefore, the use of the Black-Scholes option pricing model, as required by IFRS, may not provide a realistic measure of the fair value of the Company's warrants at the date of issue.

On 24 May 2013 the Directors, by Special Resolution, were authorised to implement, at a future date to be approved by the Board, the reorganisation of the Company's share capital as follows:

a) the consolidation of the Company's share capital so that every 50 Ordinary shares of £0.001 in the issued share capital of the Company be consolidated into one Ordinary share of £0.05 (New Ordinary share). Each New Ordinary share would have the same rights and would be subject to the same restrictions as an existing Ordinary share.

b) following the consolidation in a) the sub division of each New Ordinary share into one Ordinary share of £0.001 and one Deferred share of £0.049.

c) the rights and restrictions of the New Ordinary and Deferred shares are set out in the Articles of Association adopted.

This reorganisation was approved by the Board as announced on 16 July 2014. The reorganisation has resulted in the issued share capital now consisting of 11,238,797 New Ordinary Shares of £0.001 each and 11,238,797 Deferred Shares of £0.049 each.

15. LOSS PER ORDINARY SHARE

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 in issue during the period.

Diluted loss per share is calculated by adjusting the weighted average number of Ordinary shares in issue to assume the conversion of all dilutive potential ordinary shares at the start of the period. The Company's dilutive potential Ordinary shares arise from warrants. In respect of the warrants a calculation is performed to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to the outstanding warrants. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the warrants.

There were no potentially dilutive warrants as the exercise price exceeded the average market price of the Ordinary shares during the period. Any potentially dilutive Ordinary shares would have been anti-dilutive because the Group was loss-making.

16. ULTIMATE CONTROLLING PARTY

In the opinion of the Directors there is no ultimate controlling party.

17. SUBSEQUENT EVENTS

On 16 July 2014 the Company implemented the reorganisation of its share capital in accordance with the Special Resolution duly approved at the Annual General Meeting in 2013 as follows:

a) the consolidation of the Company's share capital so that every 50 Ordinary shares of £0.001 in the issued share capital of the Company be consolidated into one Ordinary share of £0.05 (New Ordinary share). Each New Ordinary share would have the same rights and would be subject to the same restrictions as an existing Ordinary share.

b) following the consolidation in a) the sub division of each New Ordinary share into one Ordinary share of £0.001 and one Deferred share of £0.049.

The reorganisation has resulted in the issued share capital now consisting of 11,238,797 New Ordinary Shares of £0.001 each and 11,238,797 Deferred Shares of £0.049 each.

NOTE TO THE RESULTS ANNOUNCEMENT OF MERCOM OIL SANDS PLC FOR THE YEAR ENDED 31 MARCH 2014

The financial information set out above does not constitute the Group's financial statements for the years ended 31 March 2014 or 2013, but is derived from those financial statements. Statutory financial statements for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered today. The auditors have reported on the 2013 and 2014 financial statements which carried an unqualified audit report, did not include a reference to any matters to which the auditor drew attention by way of emphasis and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

AVAILABILITY OF FINANCIAL STATEMENTS

The full financial statements for the year to 31 March 2014 will be posted to shareholders and a copy will be available to download from the Company's website www.mercomoil.comtoday.

For further information, contact: