TIDMADV
RNS Number : 8141D
Advance Energy PLC
30 October 2020
Advance Energy PLC
(the "Company")
Annual Results for the Year Ended 30 April 2020
Advance Energy PLC announces its audited results for the
financial year ended 30 April 2020.
Copies of the Annual Report and Accounts will be posted to
shareholders and made available on the Company's website at:
https://www.advanceplc.com/
Enquires:
Advance Energy plc
Leslie Peterkin (CEO) / Stephen West (CFO) +44 (0)1624 681 250
Buchanan (Public Relations)
Ben Romney / Kelsey Traynor +44 (0)20 7466 5000
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish / James Biddle +44 (0) 20 7628 3396
Novum Securities Limited (Joint Broker)
Colin Rowbury +44 (0)20 7399 9427
Optiva Securities Limited (Joint Broker)
Christian Dennis +44 (0)20 3411 1881
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
CHAIRMAN'S REPORT
On behalf of the Board of Directors, I hereby present the
financial statements of Advance Energy plc (the "Company") for the
year ended 30 April 2020.
I am pleased to provide the following statement as part of the
2020 Annual Report. The financial and operational highlights
included in the Directors Report provide good context for the
market backdrop and, more importantly, the Board's ambitions to
execute its stated growth strategy.
Introduction
It's been a year of tremendous change for the Company. We
started the last fiscal year as Andalas Energy & Power plc and
have undergone a complete change of identity and strategy in the
first quarter of 2020 to create Advance Energy plc as we are
trading today.
The focus for the Company since this time has been solely on
execution of the strategy set forth in our March Strategy Update,
as this was the objective of the new Board and executive team when
recapitalising the Company in February 2020.
Our strategy is intended to create a sustainable business
capable of exceptional growth, as well as delivering ongoing
returns to shareholders via a dividend policy linked to cash flow
generation from our project portfolio. Clearly, it is too early to
elaborate on this policy but we feel it is important to state our
intentions early.
In fact, it is fully consistent with our founding philosophy of
maintaining strong alignment between shareholders and management.
At the current time Directors and executives own in excess of 20%
of the Company and we want to keep our strong alignment as the
Company grows.
Strategic Focus
The Board has articulated a clear, focused, and compelling
strategy to deliver the Advance Energy vision: to provide
exceptional returns to our investors by unlocking hidden value in
discovered oil & gas assets.
We seek to take non-operated interests either by acquisition or
farm-in, and prefer joint ventures with only two parties where we
have the ability to exert a significant degree of influence.
Our model means that we only work with established operators
eliminating many of the execution risks present for typical early
stage, high growth companies. We can focus on what really adds
value rather than day-to-day operational concerns leaving that to
the operator.
An additional benefit is that we have no need to build a large
and complex operations team thereby keeping our overheads low and
preserving value for our shareholders.
We feel that our strategy is somewhat novel but perfectly suited
to the current market trends where major shifts are happening in
the industry to accommodate the "energy transition" and the
pressure of the latest commodity price cycle triggered by the
ongoing COVID pandemic.
Nevertheless, these are uncertain times, especially for many
investors, which makes the execution of our strategy more
challenging, despite also providing a more compelling deal flow to
consider.
Key Objectives for the Current Fiscal Year
This year we have a simple set of objectives - the primary one
being to execute one or more transformative transactions.
Ancillary to this and with an eye towards our ambitious growth
goals we need to strengthen our Company in a number of
respects.
Firstly, we need to further establish our identity in the market
and build up a loyal following of investors who understand our
business, while seeking to diversify and deepen our sources of
funding with both equity and debt providers.
And secondly, we need to consolidate our alliances of technical
support and services which are essential to our low-cost business
model while remaining focused on strict cost control as we move
forward.
Outlook
We are confident that we are on track to deliver on all of our
ancillary objectives for the year. Our cost control is such that we
have amongst the lowest G&A costs of all companies listed on
the AIM.
However, at this stage in the development of the Company there
is only one real overriding question. Can the team deliver a
transformative transaction?
At the current time all I can state is that we are making
progress in maturing our priority opportunities and have a positive
outlook in that regard.
We have also developed a pipeline of potential projects which we
believe have the ability to deliver value in the longer term. This
is a pre-requisite for reaching our longer-term objective of
establishing Advance Energy as a material player in the sector with
in excess of 20,000 barrels per day net production within five
years.
The Board is confident that it has the right strategy in place,
and the right team to deliver on this objective. The complementary
experience, extensive industry relationships, and tenacity of the
current team provide a strong basis for that confidence.
The first steps in our journey have already been taken, and I
would like to take this opportunity to thank the Board and the
executive management for their hard work and commitment throughout
this period and look forward to the exciting times ahead.
Mark Rollins
Non-Executive Chairman
30 October 2020
DIRECTORS' REPORT
The Directors present their report and the audited financial
statements for the year ended 30 April 2020.
Change of name
On 26 February 2020, at an Extraordinary General Meeting, the
shareholders approved changing the Company name from Andalas Energy
and Power Plc to Advance Energy Plc.
Principal activities, business review and future
developments
The principal activity of Advance Energy Plc during the year was
as a gas to power developer in the Republic of Indonesia and the
UK. Further details on the activities of the Group are provided in
the Review of Operations (below).
Impact of COVID-19
The global COVID-19 pandemic required us, like many of our
peers, to alter our operational plans and implement strict safety
protocols to protect our staff and our local community. Our
operational productivity was not affected as we do not currently
operate any projects. Ultimately the Company was able continue with
the day to day activities with minimal affect. Whilst there are
still certain restrictions imposed on our activities by the crisis,
we are confident of our ability to adapt to this dynamic situation
and continue our day to day activities.
Results and dividends
Loss on ordinary activities after taxation amounted to
$1,231,000 (30 April 2019: $3,930,000). The Directors do not
recommend the payment of a dividend (30 April 2019: $Nil).
Review of Operations
On 5 June 2019 the Company announced Corallian Energy Limited,
the Operator in the Company's joint venture (where the Company held
a 8% interest), together with its other partners, UOG Colter, Baron
Oil and Corfe Energy had been offered Blocks 98/11b and 98/12 in
the English Channel by the UK Oil and Gas Authority ("OGA") in the
31(st) Offshore Licensing Round. However, subsequently on 1
November 2019 the Company announced that the joint venture group
had decided to not accept the licences due to the OGA amending the
block areas such that they no longer included the primary targets
that had been identified as part of the application process.
On 21 June 2019 the Company announced that it had entered into
an operating services and option agreement ("Services Agreement")
in respect of the producing Betun-Selo KSO in Sumatra, Indonesia
and had also issued a GBP2 million unsecured, interest-free
convertible loan note facility ("Convertible Note") arranged by
Optiva Securities. The Betun-Selo KSO comprises the producing Betun
field and the non-producing Selo field. During the year the Company
met all its obligations under the Services Agreement.
On 26 June 2019 the Company announced that GBP560,000 of the
Convertible Note had been converted into 373,333,333 new ordinary
shares at a price of 0.15 pence per share.
On 3 July 2019 the Company announced that a further GBP100,000
of the Convertible Note had been converted into 66,666,666 new
ordinary shares at a price of 0.15 pence per share.
On 23 December 2019 the Company announced that it had raised
GBP250,000 through the issue of 166,666,667 new ordinary shares at
a price of 0.15 pence per share.
On 4 February 2020 the Company announced the following changes
to the Board and management team:
a) Mr Leslie Peterkin was appointed Chief Executive Officer and director;
b) Mr Mark Rollins was appointed non-Executive Chairman and director;
c) Mr Anthony John Battrick was appointed Technical Manager; and
d) Dr Robert Arnott and Mr Simon Gorringe stepped down from
their roles as Chairman and CEO respectively.
In addition, on 4 February 2020 the Company announced that
GBP525,000 had been raised by a subscription of 349,999,998 new
shares at a price of 0.15 pence per subscription share, with the
new directors and management subscribing for 333,333,332 of these
new shares as follows:
a) Mr Peterkin subscribed for 133,333,333 new shares
b) Mr Rollins subscribed for 133,333,333 new shares, and
c) Mr Battrick subscribed for 66,666,666 new shares.
On 26 February 2020 an Extraordinary General Meeting was held
and a resolution was passed to change the name of the Company to
Advance Energy Plc.
Key Performance Indicators ('KPIs')
The Board monitors the activities and performance of the Group
on a regular basis, including as part of the regular Board updates
and Board meetings. During the year the principal focus of the
Group was to develop an onshore upstream E&P business in the
Republic of Indonesia and to continue to explore upstream E&P
opportunities. The KPIs being monitored by the Group as at the date
of this report were as follows:
- Cash management;
- Business development; and
- Project development
Risks and uncertainties
The principal risks and uncertainties inherent in an Advance
Energy's business strategy are summarised below:
- Volatility of commodity prices which may impact investment
decisions taken. The Group monitors price forecasts in Board
meetings and reacts accordingly.
- Foreign currency volatility impacts the potential cost base of
projects and the Group monitors and assesses, as far as
practicable, the impact on budgets and cash flows.
- Operational risks relate to dealing with stakeholders on any
potential project. The ability of partners to finance and support
projects, customers or governments to approve projects can impact
budgets and cash flows and the Group maintains and monitors its
stakeholder relationships.
- Availability of finance and funding is key to ensuring that
there are funds available for working capital and to allow the
Group to make strategic investment decisions. The Board is
responsible for monitoring the cash flows and cash forecasts of the
business.
Financial Risk Management
The Group's operations expose it to a variety of financial risks
that include the effect of changes in debt market prices, movements
in foreign currency exchange rates, credit risk and liquidity risk.
The Group has a risk management programme in place that seeks to
limit the adverse effects on the financial performance of the Group
by monitoring levels of debt finance and the related finance costs.
The Group does not use derivative financial instruments to manage
interest rate or foreign exchange costs and, as such, no hedge
accounting is applied. Details of the Group's financial risk
management policies are set out in Note 15 to the Financial
Statements.
Internal Controls
The Board recognises the importance of both financial and
non-financial controls and has reviewed the Group's control
environment and any related shortfalls during the year. Since the
Group was established, the Directors are satisfied that, given the
current size and activities of the Group, adequate internal
controls have been implemented.
Going Concern
After reviewing areas that could give rise to significant
financial exposures, the Board has a reasonable expectation that
the Company and the Group have adequate resources to continue their
operations and that sufficient liquidity will be available to meet
current expenses from a combination of existing cash reserves and
capital raises. Consequently, the financial statements have been
prepared on a going concern basis. The Company raises money to
support its corporate overheads, its operations and capital
projects as and when required. The Group requires additional
funding to meet its daily working capital needs, to settle its
outstanding liabilities and in order to fund the development of its
projects. As additional funding is required in order to settle
outstanding liabilities, to meet ongoing working capital needs and
to raise finance to fund project development there can be no
assurance that the Group's projects will be developed in accordance
with current plans or completed on time or to budget. Therefore,
future work on the development of the Group's projects and
financial returns arising therefrom may be adversely affected by
factors outside the control of the Group which are inherently
linked to the availability of funding for the Group.
The Directors remain confident that the potential future income
stream from the development of its projects, the continued part
payment of remuneration of the Directors in shares and warrants,
together with the Directors' historic ability to raise additional
funds will enable the Group to settle its outstanding liabilities,
finance its future working capital and fund the development cost
requirements of its projects beyond the period of twelve months
from the date of approval of this report. However, there are no
confirmed funding arrangements in place at present and as such
there can be no guarantee that the required funds to settle current
liabilities, meet future working capital requirements and fund
future development costs will be available to the Group within the
necessary timeframe. Consequently, a material uncertainty exists
that may cast significant doubt on the Group's ability to fund this
cash shortfall and therefore be able to meet its commitments and
discharge its liabilities in the normal course of business for a
period not less than twelve months from the date of approval of
these financial statements. The financial statements do not include
the adjustments that would result if the Group were unable to
continue in operation.
Directors
The following Directors held office during the year and to the
date of this report:
Mark Rollins (appointed 4 February 2020)
Leslie Peterkin (appointed 4 February 2020)
Ross Warner
Graham Smith (resigned 1 June 2020)
Simon Gorringe (resigned 4 February 2020)
Dr Robert Arnott (resigned 4 February 2020)
Stephen West (appointed 1 June 2020)
The Board considers the directors to be independent other than
in respect of those directors with an interest as disclosed
below.
Directors' interests
The beneficial and non-beneficial interests in the Company's
shares of the Directors (who remain in office at the respective
reporting dates) and their families, as at the date of approval of
the financial statements are as follows:
2020 2019 2020 2019
Ordinary shares Ordinary shares Options (1) Options
Mark Rollins 139,833,333 - 50,000,000 -
Leslie Peterkin 139,833,333 - 50,000,000 -
Ross Warner 2,052,875 2,052,875 12,500,000 498,000
Simon Gorringe - 5,060,663 - 498,000
Graham Smith 360,000 360,000 - -
Dr Robert Arnott - - - -
(1) These relate to 0.30 pence options (vested and unvested)
that were allocated to a number of Directors of the Company on 4
February 2020. Half of the options vested immediately on 4 February
2020 and the remaining half will vest on 1 February 2021. Vesting
of the options is subject to the option holder providing continuous
service during the vesting period and there are no other
performance conditions attached to the options. The vested shares
are shown in the Options table in Note 8, whilst the unvested
options are described in Note 8.
Details of the Directors' remuneration are given in note 9 to
the Financial Statements.
Provision of information to auditors
So far as each of the Directors is aware at the time this report
is approved:
-- there is no relevant audit information of which the Group's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
Auditor
Lubbock Fine, who, being eligible, have expressed their
willingness to continue in office in accordance with the Isle of
Man Companies Act 2006.
This report was approved by the Board and signed on its behalf
by:
Mark Rollins
30 October 2020
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
The Directors are required to prepare financial statements for
each financial year. The Directors have elected to prepare the
Group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union. Under company law the Directors must not approve the
financial statements unless they are satisfied they give a true and
fair view of the state of affairs of the Group and of the profit or
loss of the Group for that year. In preparing these financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the Financial Statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and currently explain the
Group's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and which allow financial
statements to be prepared. They are also responsible for
safeguarding the assets of the Group, and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website. The Group is compliant with AIM Rule 26 regarding the
Group's website.
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF ADVANCE ENERGY
PLC
OPINION
We have audited the consolidated financial statements of Advance
Energy plc (the 'Company') and its subsidiaries (the 'Group') for
the year ended 30 April 2020, which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Cash Flow Statement, and the related
notes, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards as adopted by the European Union.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. In our
opinion:
-- the financial statements give a true and fair view of the
state of the Group's affairs as at 30 April 2020 and of the Group's
loss for the year then ended; and
-- the financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's Responsibilities
for the Audit of the Consolidated Financial Statements section of
our report. We are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the
consolidated financial statements in the United Kingdom, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
MATERIAL UNCERTAINTY RELATING TO GOING CONCERN
We draw your attention to Note 2I to the financial statements
which explains that the Group requires further funding, although no
confirmed funding arrangement in place, in order to continue to
undertake the required work to develop and build its asset
acquisition strategy and to continue as a going concern. The
matters explained in Note 2I indicate that a material uncertainty
exists that may cast significant doubt on the Group's ability to
continue as a going concern. These financial statements do not
include the adjustments that would result if the Group were unable
to continue as a going concern. Our opinion is not modified in
respect of this matter.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period and include
the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which
had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of
the engagement team.
These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key audit matter How our audit addressed the
key audit matter
Impairment of exploration asset
The Group had capitalised amounts Given the indicators of impairment
in respect of the historic exploration in the year we have reviewed
expenditure in relation to the management's impairment review
Colter project. During the year of the asset and carried out
the board decided not to renew our own review of the entity.
the licence due to poor results Based on this work we consider
and the asset, which had a carrying it appropriate that an impairment
value of $267k, was written adjustment is made against this
off. asset.
----------------------------------------
Impairment of Betun Selo investment
During the year the Group entered Given the indicators of impairment
into a production agreement in the year we have reviewed
in Indonesia as detailed in management's impairment review
note 11. Due to poor results of the asset and carried out
in the year, the board determined our own review of the entity.
that no amounts were expected Based on this work we consider
to be received from this arrangement it appropriate that an impairment
and the investment of $604k adjustment is made against this
in the year was written off. asset.
----------------------------------------
Going concern
As detailed in note 2I, there We have discussed the going
is considered to be material concern basis with management
uncertainty over whether the and reviewed the Group's forecasts
Group will be able to obtain and budgets.
sufficient funds to meet its
liabilities as they fall due.
----------------------------------------
Accuracy and completion of equity
In the current year, the Group We obtained an understanding
entered into a large number of the nature of equity transactions
of transactions impacting equity entered into by the Company
which include share issues, during the year through discussions
share warrants and other equity with management a review of
settled transactions with third regulatory news service announcements
parties. Given the qualitative and from the review of Board
and quantitative impact on the minutes and key contracts.
share structure of the Group
and the judgements and estimates
required to be taken by management
to value share transactions,
this financial statement area
is considered to be an audit
risk that could result in a
material misstatement.
----------------------------------------
OUR APPLICATION OF MATERIALITY
The scope and focus of our audit was influenced by our
assessment and application of materiality. We apply the concept of
materiality both in planning and performing our audit, and in
evaluating the effect of misstatements on our audit and on the
consolidated financial statements.
We define financial statements materiality as the magnitude by
which misstatements, including omissions, could influence the
economic decisions taken on the basis of the consolidated financial
statements by reasonable users.
We also determine a level of performance materiality, which we
use to determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the consolidated financial statements as a whole.
-- Overall materiality - We determine materiality for the
consolidated financial statements as a whole to be $62,000. This
was based on the key performance indicator, being 5% of the
adjusted loss. We believe adjusted loss after tax to be the most
appropriate bench mark.
-- Performance materiality - On the basis of our risk
assessment, together with our assessment of the Group's control
environment, our judgement is that performance materiality for the
consolidated financial statements should be 50% of materiality,
amounting to $31,000.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the consolidated
financial statements. In particular, we looked at where the
directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial
statements as a whole, taking into account an understanding of the
structure of the Group, its activities, the accounting processes
and controls, and the industry in which they operate. Our planned
audit testing was directed accordingly and was focused on areas
where we assessed there to be the highest risk of material
misstatement. During the audit, we reassessed and re-valuated audit
risks and tailored our approach accordingly.
The audit testing included substantive testing on significant
transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the
control environment, the effectiveness of controls and management
of specific risk.
We communicated with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant findings, including any significant deficiencies in
internal control that we identify during the audit.
OTHER INFORMATION
The directors are responsible for the other information. The
other information comprises the information included in the Annual
Report, other than the consolidated financial statements and our
Auditors' Report thereon. Our opinion on the consolidated financial
statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether there is a material misstatement in the consolidated
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
RESPONSIBILITIES OF DIRECTORS
The directors are responsible for the preparation and fair
presentation of the consolidated financial statements in accordance
with International Financial Reporting Standards as adopted by the
European Union, and for such internal control as the directors
determine is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
The directors are also responsible for overseeing the Group's
financial reporting process. The audit committee of the Company
(the "Audit Committee") assists the directors in discharging their
responsibility in this regard.
AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE GROUP FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an Auditors' Report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
of the effectiveness of the Group's internal control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the director.
-- Conclude on the appropriateness of the director's use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our Auditors' Report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained
up to the date of our Auditors' Report. However future events or
conditions may cause the Group to cease to continue as a going
concern.
-- Evaluate the overall presentation, structure and content of
the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
USE OF OUR REPORT
This report is made solely to the Company's members, as a body,
in accordance with our engagement letter dated 16 July 2019. Our
audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an Auditors' Report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members, as a body,
for our audit work, for this report, or for the opinions we have
formed.
Lubbock Fine
Chartered Accountants & Statutory Auditors
3rd Floor Paternoster House
65 St Paul's Churchyard
London
EC4M 8AB
30 October 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the
For the year year ended
ended 30 April
30 April 2020 2019
Note US$'000 US$'000
----------------------------------- ----- ---------------- ------------
Investment loss:
Unrealised loss on investments 11 (604) (524)
Impairment of exploration
asset 11 (267) -
----------------------------------- ----- ---------------- ------------
(871) (524)
----------------------------------- ----- ---------------- ------------
Other income - 29
Asset evaluation expense 6 (23) (2,293)
Other administrative expenses 6 (293) (1,079)
----------------------------------- ----- ---------------- ------------
Net loss before finance costs
and taxation (1,187) (3,867)
Finance costs (44) (63)
----------------------------------- ----- ---------------- ------------
Loss before tax (1,231) (3,930)
Tax expense 10 - -
----------------------------------- ----- ---------------- ------------
Loss after tax attributable
to owners of the parent (1,231) (3,930)
----------------------------------- ----- ---------------- ------------
Total comprehensive loss for
the year attributable to owners
of the parent (1,231) (3,930)
----------------------------------- ----- ---------------- ------------
Basic and diluted loss per
share attributable to owners
of the parent during the year
(expressed in US cents per
share) 7 (0.11) (1.10)
----------------------------------- ----- ---------------- ------------
The Statement of Comprehensive Income has been prepared on the
basis that all operations are continuing.
The accompanying notes form an integral part of these Financial
Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 April 30 April
2020 2019
Note US$'000 US$'000
-------------------------------- ----- ---------- ----------
Assets
Non-current assets
Financial assets at fair value
through profit or loss 11 - -
Equity investment in associate 11 - -
Other investments 12 - 267
Total non-current assets - 267
-------------------------------- ----- ---------- ----------
Current assets
Other receivables 15 75
Cash and cash equivalents 562 258
-------------------------------- ----- ---------- ----------
Total current assets 577 333
-------------------------------- ----- ---------- ----------
Total assets 577 600
-------------------------------- ----- ---------- ----------
Liabilities
Current liabilities
Trade and other payables 14 (323) (853)
Total liabilities (323) (853)
-------------------------------- ----- ---------- ----------
Net assets 254 (253)
-------------------------------- ----- ---------- ----------
Equity attributable to the owners
of the parent
Share premium 18,665 16,878
Accumulated deficit (18,411) (17,131)
-------------------------------- ----- ---------- ----------
Total shareholder funds 254 (253)
-------------------------------- ----- ---------- ----------
The Financial Statements were approved and authorised for issue
by the Board of Directors on 30 October 2020 and were signed on its
behalf by
Mark Rollins
Director
The accompanying notes form an integral part of these Financial
Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Accumulated Total
premium deficit equity
US$'000 US$'000 US$'000
Balance at 1 May 2018 13,377 (13,316) 61
--------------------------------------- ---------- ------------ --------
Loss for the year to 30 April 2019 - (3,930) (3,930)
Total comprehensive income - (3,930) (3,930)
Transactions with equity shareholders
of the parent
Proceeds from shares issued 3,669 - 3,669
Cost of share issue (282) - (282)
Consideration shares 163 - 163
Share based payments - warrants (49) 49 -
Share based payments - options - 66 66
--------------------------------------- ---------- ------------ --------
Balance at 30 April 2019 16,878 (17,131) (253)
Loss for the year to 30 April 2020 - (1,231) (1,231)
Total comprehensive income - (1,231) (1,231)
Transactions with equity shareholders
of the parent
Share based payments - warrants 49 (49) -
Share based payments - options - - -
Proceeds from shares issued 1,833 - 1,833
Cost of share issues (95) - (95)
Balance at 30 April 2020 18,665 (18,411) 254
--------------------------------------- ---------- ------------ --------
The accompanying notes form an integral part of these Financial
Statements.
CONSOLIDATED CASH FLOW STATEMENT
For the For the
year ended year ended
30 April 30 April
2020 2019
$'000s $'000s
--------------------------------------------- ------------ --- ------------
Cash flows from operating activities:
Net loss for the year (1,231) (3,930)
Adjustments for :
Share-based payment - 66
Unrealised loss from financial assets
at fair value - 524
Impairment of intangible asset 267 -
Change in working capital items:
Decrease in other receivables 59 786
Decrease in trade and other payables (529) (192)
--------------------------------------------- ------------ --- ------------
Net cash used in operations (1,434) (2,746)
--------------------------------------------- ------------ --- ------------
Cash flows from investing activities
Investment in associate - (154)
Other investments - (267)
--------------------------------------------- ------------ --- ------------
Net cash from investing activities - (421)
--------------------------------------------- ------------ --- ------------
Cash flows from financing activities
Proceeds from issue of share capital 1,833 3,669
Share issue costs (95) (282)
Net cash generated by financing activities 1,738 3,387
--------------------------------------------- ------------ --- ------------
Net increase in cash and cash equivalents 304 220
Cash and cash equivalents, at beginning
of the year 258 38
Effect of foreign exchange rate changes - -
------------ --- ------------
Cash and cash equivalents, at end
of the year 562 258
--------------------------------------------- ------------ --- ------------
Major Non-Cash Transactions
Details of major non-cash transactions are described in note
11.
The accompanying notes form an integral part of these Financial
Statements.
NOTES TO FINANCIAL STATEMENTS
1 Reporting Entity
Advance Energy Plc ('the Company') is domiciled in the Isle of
Man. The Company's registered office is at 55 Athol Street,
Douglas, Isle of Man IM1 1LA. These consolidated financial
statements comprise the Company and its subsidiaries (together
referred to as the 'Group'). The Group is primarily involved in the
energy business, focussed on the Republic of Indonesia and the
United Kingdom. The Company is listed on the Alternative Investment
Market of the London Stock Exchange.
2 Basis of accounting
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS"). They were authorised for
issue by the Company's board of directors on 30 October 2020.
Details of the Group's accounting policies are included
below:
Standards and amendments effective for the period beginning 1
January 2019 or later
A number of other new standards are effective from 1 January
2019 but they do not have a material effect on the Company's
financial statements.
IFRS 16 introduced a single, on-balance sheet accounting model
for lessees. The Company is not a lessee or a lessor. The adoption
of IFRS 16 had no impact on the net assets attributable to holders
of shares or the Company and no restatement of comparative
information was required from the adoption of this new accounting
standard.
A number of new standards are effective for annual periods
beginning after 1 January 2019 and earlier application is
permitted; however, the Group has not early adopted the new or
amended standards in preparing these consolidated financial
statements.
The following amended standards and interpretations are not
expected to have a significant impact on the Group's consolidated
financial statements:
-- Amendments to References to Conceptual Framework in IFRS Standards;
-- Definition of a Business (Amendments to IFRS 3);
-- Definition of Material (Amendments to IAS 1 and IAS 8); and
-- IFRS 17 Insurance Contracts.
A. Basis of consolidation
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
'controls' an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases.
ii. Non-controlling interests ("NCI")
NCI are measured initially at their proportionate share of the
acquiree's identifiable net assets at the date of acquisition.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions.
iii. Interests in equity-accounted investees
The Group's interests in equity-accounted investees comprise
interests in associates and a joint venture.
Associates are those entities in which the Group has significant
influence, but not control or joint control, over the financial and
operating policies. A joint venture is an arrangement in which the
Group has joint control, whereby the Group has rights to the net
assets of the arrangement, rather than rights to its assets and
obligations for its liabilities.
Interests in associates and the joint venture are accounted for
using the equity method. They are initially recognised at cost,
which includes transaction costs. Subsequent to initial
recognition, the consolidated financial statements include the
Group's share of the profit or loss and other comprehensive income
("OCI") of equity accounted investees, until the date on which
significant influence or joint control ceases.
iv. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of
the Group's interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
B. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the
respective functional currencies of Group companies at the exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and
liabilities that are measured at fair value in a foreign currency
are translated into the functional currency at the exchange rate
when the fair value was determined. Non-monetary items that are
measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction.
Foreign currency differences are generally recognised in profit or
loss and presented within finance costs.
However, foreign currency differences arising from the
translation of the following items are
recognised in OCI:
- an investment in equity securities designated as at FVOCI
(except on impairment, in which case foreign currency differences
that have been recognised in OCI are reclassified to profit or
loss);
- a financial liability designated as a hedge of the net
investment in a foreign operation to the extent that the hedge is
effective; and
- qualifying cash flow hedges to the extent that the hedges are effective.
ii. Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are
translated into USD at the exchange rates at the reporting date.
The income and expenses of foreign operations are translated into
USD at the exchange rates at the dates of the transactions.
Foreign currency differences are recognised in OCI and
accumulated in the translation reserve, except to the extent that
the translation difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or
partially such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related
to that foreign operation is reclassified to profit or loss as part
of the gain or loss on disposal. If the Group disposes of part of
its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to NCI. When
the Group disposes of only part of an associate or joint venture
while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to
profit or loss.
C. Employee benefits
i. Short-term employee benefits
Short-term employee benefits are expensed as the related service
is provided. A liability is recognised for the amount expected to
be paid if the Group has a present legal or constructive obligation
to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
ii. Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment
arrangements granted to employees is generally recognised as an
expense, with a corresponding increase in equity, over the vesting
period of the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the related
service and non-market performance conditions are expected to be
met, such that the amount ultimately recognised is based on the
number of awards that meet the related service and non-market
performance conditions at the vesting date. For share-based payment
awards with non-vesting conditions, the grant-date fair value of
the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual
outcomes.
The fair value of the amount payable to employees in respect of
SARs, which are settled in cash, is recognised as an expense with a
corresponding increase in liabilities, over the period during which
the employees become unconditionally entitled to payment. The
liability is remeasured at each reporting date and at settlement
date based on the fair value of the SARs. Any changes in the
liability are recognised in profit or loss.
D. Income tax
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity
or in OCI.
The Group has determined that interest and penalties related to
income taxes, including uncertain tax treatments, do not meet the
definition of income taxes, and therefore accounted for them under
IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
i. Current tax
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date, and
reflects uncertainty related to income taxes, if any.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Group has not rebutted this
presumption.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
E. Exploration expenditure
In-line with IFRS 6 the Company has elected not to capitalise
expenditure in relation to its farm-in arrangements for oil and gas
exploration, with the exception of costs in respect of the
acquisition of rights to explore. These have been classified as
other investments in the consolidated financial statements.
F. Share capital
Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity. Income tax
relating to transaction costs of an equity transaction is accounted
for in accordance with IAS 12.
G. Impairment
At each reporting date, the Group reviews the carrying amounts
of its non-financial assets (other than biological assets,
investment property, inventories, contract assets and deferred tax
assets) to determine whether there is any indication of impairment.
If any such indication exists, then the asset's recoverable amount
is estimated.
Impairment losses are recognised in profit or loss. They are
allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts of
the other assets in the CGU on a pro rata basis.
H. Fair value measurement
'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantageous market to which
the Group has access at that date. The fair value of a liability
reflects its non-performance risk.
A number of the Group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
When one is available, the Group measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as 'active' if transactions for
the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group
uses valuation techniques that maximise the use of relevant
observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a
transaction.
If an asset or a liability measured at fair value has a bid
price and an ask price, then the Group measures assets and long
positions at a bid price and liabilities and short positions at an
ask price.
The best evidence of the fair value of a financial instrument on
initial recognition is normally the transaction price - i.e. the
fair value of the consideration given or received. If the Group
determines that the fair value on initial recognition differs from
the transaction price and the fair value is evidenced neither by a
quoted price in an active market for an identical asset or
liability nor based on a valuation technique for which any
unobservable inputs are judged to be insignificant in relation to
the measurement, then the financial instrument is initially
measured at fair value, adjusted to defer the difference between
the fair value on initial recognition and the transaction price.
Subsequently, that difference is recognised in profit or loss on an
appropriate basis over the life of the instrument but no later than
when the valuation is wholly supported by observable market data or
the transaction is closed out.
I. Going concern
The consolidated financial statements have been prepared on a
going concern basis. The Company raises money to support its
corporate overhead, its operations and capital projects as and when
required. The Group requires additional funding to meet its daily
working capital needs, to settle its outstanding liabilities and in
order to fund the development of its projects. As additional
funding is required in order to settle outstanding liabilities, to
meet ongoing working capital needs and to raise finance to fund
project development there can be no assurance that the Group's
projects will be developed in accordance with current plans or
completed on time or to budget. Therefore, future work on the
development of the Group's projects and financial returns arising
therefrom may be adversely affected by factors outside the control
of the Group which are inherently linked to the availability of
funding for the Group.
As there are no confirmed funding arrangements in place at
present; there can be no guarantee that the required funds to
settle current liabilities, meet future working capital
requirements and fund future development costs will be available to
the Group within the necessary timeframe. Consequently, a material
uncertainty exists that may cast significant doubt on the Group's
ability to fund this cash shortfall and therefore be able to meet
its commitments and discharge its liabilities in the normal course
of business for a period not less than twelve months from the date
of approval of these financial statements. The financial statements
do not include the adjustments that would result if the Group were
unable to continue in operation.
3 Functional and presentation currency
These consolidated financial statements are presented in US
Dollars ("USD"), which is the Company's functional currency. All
amounts have been rounded to the nearest thousand, unless otherwise
indicated.
4 Use of judgements and estimates
In preparing these consolidated financial statements, management
has made judgements and estimates that affect the application of
the Group's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
A. Judgements
Information about judgements made in applying accounting
policies that have the most significant effects on the amounts
recognised in the financial statements is included in the following
notes:
- Note 11 - equity-accounted investees: whether the Group has
significant influence over an investee;
- Note 16 - consolidation: whether the Group has de facto
control over an investee.
B. Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at 30
April 2020 that have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities in the
next financial year is included in the following notes:
Share based payments (note 8)
The Group has made awards of options and warrants over its
un-issued capital. The valuation of these options and warrants
involve making a number of estimates relating to price volatility,
future dividend yields, expected life and forfeiture rates.
Going concern (note 2I)
The Group made a loss in the year. The board has prepared a
budget and considered its ability to continue as a going concern,
together with the Directors historic ability to raise additional
funds will enable the Group to finance its future working capital
and development cost requirements beyond the period of twelve
months from the date of this report.
Valuation of investments (note 11/12)
The Group held two significant assets in the year: an intangible
exploration asset in respect of the Colter licence (discussed in
note 12) and an Incremental Production Agreement asset in respect
of Betun Selo (note 11). The board have reviewed the expected
returns from both projects and determined that both projects should
be fully impaired at the year-end.
i) Measurement of fair values (Note 2H)
A number of the Group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities. The Group has an established
control framework with respect to the measurement of fair
values.
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in
the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change has occurred.
Level 3 inputs
The following table gives information about how the fair values
of Group's investments are determined (in particular, the valuation
techniques and inputs used).
Assets and Nature of Fair value Fair value Valuation Significant
liabilities investment as at 30 as at 30 techniques unobservable
April 2020 April 2019 and key inputs input
Financial 25% of equity USD Nil USD Nil Recent purchase Expected
assets at investment price and realisable
fair value in Eagle market knowledge value from
through profit Gas Ltd sale
or loss
-------------- ------------ ------------ ------------------ --------------
Financial 20% of equity USD Nil USD Nil Purchase Expected
assets at investment price and realisable
fair value in Peelwood market knowledge value from
through profit Pty Ltd sale
or loss
-------------- ------------ ------------ ------------------ --------------
Financial Production USD Nil USD Nil Cashflow Future cash
assets at agreement forecasting flows
fair value returns from
through profit Betun Selo
or loss
-------------- ------------ ------------ ------------------ --------------
5 Operating Segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker
("CODM"). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments and make strategic
decisions, has been identified as the Directors of the Group. In
the opinion of the Directors, the operations of the Group comprise
two operating segments comprising firstly of that of developer of
gas to power projects in the Republic of Indonesia and secondly
with projects within the UK. The Group considers that it only has
one reportable segment and the Directors consider that the primary
financial statements presented substantially reflect all the
activities of the Company.
6 Administrative expenses
Administration fees and expenses consist of the following:
2020 2019
US$'000 US$'000
Audit fees 32 31
Bad debts 117 -
Professional fees 241 259
Administration costs 49 162
Directors' fees (Note 9) (146) 627
-------- --------
Total corporate overhead 293 1,079
Office costs 13 152
Consulting and farm-in expenses (36) 2,056
Travel and accommodation 46 85
-------- --------
Asset evaluation and gas to power business
expenses 23 2,293
-------- --------
7 Earnings per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
2020 2019
Loss attributable to owners of the Group
(USD thousands) (1,231) (3,930)
Weighted average number of ordinary shares
in issue (thousands) 1,107,577 357,878
Loss per share (US cents) (0.11) (1.10)
In accordance with International Accounting Standard 33
'Earnings per share', no diluted earnings per share is presented as
the Group is loss making. Details of potentially dilutive share
instruments are detailed in notes 8 and 13.
8 Share-based payment arrangements
The following is a summary of the share options and warrants
outstanding and exercisable as at 30 April 2020 and 30 April 2019
and the changes during each year:
Number of Weighted
options and average exercise
warrants price (P ence)
Outstanding and exercisable
at 1 May 2018 1,409,075,943 0.110
50:1 consolidation at 9 August
2018 (1,380,894,424) (0.085)
Options granted as consideration 36,000,000 0.571
Warrants granted for services 27,884,057 0.156
Warrants granted with share
issue 34,782,608 0.552
Lapsed options (865,009) (0.008)
---------------- ------------------
Outstanding and exercisable
at 30 April 2019 125,983,175 1.294
Cancelled options (30,000,000) (0.304)
Options granted as consideration 68,750,000 0.104
Warrants granted with share
issue 32,904,758 0.026
Outstanding and exercisable
at 30 April 2020 197,637,934 1.120
---------------- ------------------
The above weighted average exercise prices have been expressed
in pence and not cents due to the terms of the options and
warrants. The following share options or warrants were outstanding
and exercisable in respect of the ordinary shares:
Grant Date Expiry Date 1 May Issued Expired 30 April Exercise
2018 2019 Price
-
Warrants
07.12. 13 07.12.18 10,839,750 - (10,839,750) - 2.00p
24.01.14 24.01.19 26,410,714 - (26,410,714) - 1.00p
13.05.16 13.05.21 42,000,000 - - 42,000,000 0.20p
31.01.17 31.01.22 10,000,000 - - 10,000,000 0.20p
31.01.17 31.01.22 8,000,000 - - 8,000,000 0.25p
31.01.17 31.01.22 6,666,666 - - 6,666,666 0.30p
22.05.17 22.05.22 15,000,000 - - 15,000,000 0.10p
22.05.17 22.05.22 35,000,000 - - 35,000,000 0.10p
31.07.17 31.07.22 150,000,000 - - 150,000,000 0.10p
19.08.17 19.08.22 90,769,231 - - 90,769,231 0.06p
01.09.17 01.09.22 70,769,231 - - 70,769,231 0.06p
06.12.17 06.12.22 638,569,604 - - 638,569,604 0.05p
29.04.18 29.04.21 264,705,882 - - 264,705,882 0.017p
03.08.18 02.08.21 - 300,000,000 - 300,000,000 1.00p
Consolidation (1,341,356,456) (294,000,000) 36,505,455 (1,598,851,001)
20.09.18 20.09.21 - 5,217,391 - 5,217,391 1.15p
20.09.18 20.09.21 - 34,782,608 - 34,782,608 2.00p
15.03.19 14.03.22 - 16,666,666 - 16,666,666 0.45p
Options
07.12.13 07.12.18 6,000,000 - (6,000,000) - 2.00p
05.06.15 05.06.18 34,344,865 - - 34,344,865 0.40p
Consolidation (39,537,968) - 5,880,000 (33,657,968)
01.10.18 01.10.23 - 36,000,000 - 36,000,000 2.00p
28,181,519 98,666,665 (865,009) 125,983,175
---------------- -------------- ------------- ---------------- ---------
Grant Date Expiry Date 1 May Issued Expired 30 April Exercise
2019 2020 Price
-
Warrants
13.05.16 13.05.21 42,000,000 - - 42,000,000 0.20p
31.01.17 31.01.22 10,000,000 - - 10,000,000 0.20p
31.01.17 31.01.22 8,000,000 - - 8,000,000 0.25p
31.01.17 31.01.22 6,666,666 - - 6,666,666 0.30p
22.05.17 22.05.22 15,000,000 - - 15,000,000 0.10p
22.05.17 22.05.22 35,000,000 - - 35,000,000 0.10p
31.07.17 31.07.22 150,000,000 - - 150,000,000 0.10p
19.08.17 19.08.22 90,769,231 - - 90,769,231 0.06p
01.09.17 01.09.22 70,769,231 - - 70,769,231 0.06p
06.12.17 06.12.22 638,569,604 - - 638,569,604 0.05p
29.04.18 29.04.21 264,705,882 - - 264,705,882 0.017p
03.08.18 02.08.21 300,000,000 - - 300,000,000 1.00p
Consolidation (1,598,851,001) - - (1,598,851,001)
20.09.18 20.09.21 5,217,391 - - 5,217,391 1.15p
20.09.18 20.09.21 34,782,608 - - 34,782,608 2.00p
15.03.19 14.03.22 16,666,666 - - 16,666,666 0.45p
21.06.19 20.06.22 - 18,059,856 - 18,059,856 0.155p
21.06.19 20.06.22 - 10,833,334 - 10,833,334 0.155p
02.07.19 01.07.22 - 3,178,235 - 3,178,235 0.157p
03.07.19 02.07.22 - 833,334 - 833,334 0.157p
Options
05.06.15 05.06.18 34,344,865 - - 34,344,865 0.40p
Consolidation (33,657,968) - - (33,657,968)
01.10.18 01.10.23 36,000,000 - (30,000,000) 6,000,000 2.00p
01.02.20 01.02.25 - 68,750,000 - 68,750,000 0.30p
125,983,175 101,654,759 (30,000,000) 197,637,934
---------------- ------------ ------------- ---------------- ---------
The options and warrants issued in the prior year were valued
using the Black-Scholes valuation method and the assumptions used
are detailed below. The expected future volatility has been
determined by reference to the historical volatility:
Grant Share Exercise Volatility Option Dividend Risk-free Fair value
date price price life yield investment per option
at grant rate
Prior year
0.397
03.08.18 0.02p 0.02p 40% 3 years 0% 3% cents
0.204
21.09.18 2.00p 1.17p 40% 3 years 0% 3% cents
0.481
21.09.18 1.15p 1.17p 40% 3 years 0% 3% cents
0.265
02.10.18 2.00p 1.04p 40% 5 years 0% 3% cents
0.011
15.03.19 0.45p 0.17p 40% 3 years 0% 3% cents
The Group recognised $nil (30 April 2019: $115,000) relating to
equity-settled share-based payment transactions during the year
arising from Option or Warrant grants, which was charged $nil
(2019: $49,000) in respect of services performed in connection with
the issue of new shares charged to share premium and $nil (2019:
$66,000) as payment for professional fees to the income
statement.
There are 734,115 (2019: 2,060,692) of unvested options at the
year-end that are held by certain Directors and consultants, which
vest in three equal tranches relating to acquiring an economic
interest in a first concession, an interest in a second concession
and gross production from its interests in projects exceeding 400
barrels of oil per day. As the triggers for the grant of the
tranches have not occurred at the reporting date no share-based
payment charge arises.
There are 68,750,000 of unvested options at the year-end that
are held by the current Directors and consultants, which vest on 1
February 2021. Vesting of the options is subject to the option
holder providing continuous service during the vesting period and
there are no other performance conditions attached to the
options.
For the share options and warrants outstanding as at 30 April
2020, the weighted average remaining contractual life is 3.42 years
(30 April 2019: 3.30 years).
9 Employee benefits (including directors)
The group employed an average of 4 individuals during the year,
including the directors (2019: 5).
2020 2019
US$'000 US$'000
Directors' remuneration (see
below) (149) 583
Share based payments - 66
Directors' health insurance 3 -
Adjustment for over accrual - (22)
(146) 627
======== ========
Key management of the Group are considered to be the
Directors.
The remuneration of the directors during the year ended 30 April
2020 was as follows:
Short term Social
employee security Pension Waiver Total
benefits payments contribution of fees 2020
US$'000 US$'000 US$'000 US$'000 US$'000
Ross Warner 150 - - (248) (98)
Simon Gorringe 135 - - (227) (92)
Mark Rollins 15 - - 15
Leslie Peterkin 30 - - 30
Graham Smith 27 - - 27
Robert Arnott 39 4 1 44
Daniel Jorgensen 12 (87) (75)
Total Key Management 408 4 1 (562) (149)
----------- ---------- --------------- ---------- --------
The remuneration of those in office during the year ended 30
April 2019 was as follows:
Short term Social
employee security Pension Total
benefits payments contribution 2019
US$'000 US$'000 US$'000 US$'000
Daniel Jorgensen 120 14 1 135
Ross Warner 180 - - 180
Simon Gorringe 180 9 1 190
Graham Smith 12 - - 12
Robert Arnott 53 12 1 66
Total Key Management 545 35 3 583
----------- ---------- --------------- --------
10 Income taxes
The Company is resident for tax purposes in the Isle of Man and
is subject to Isle of Man tax at the current rate of 0% (2019:
0%).
Taxation reconciliation
The charge for the year can be reconciled to the loss per the
consolidated statement of comprehensive income as follows:
2020 2019
US$'000 US$'000
Loss before income tax (278) (3,930)
======== ========
Tax on loss at the weighted average Corporate - -
tax rate of 0% (2019: 0%)
-------- --------
Total income tax expense - -
======== ========
The deferred tax asset has not been recognised for in accordance
with IAS 12. The Group does not have a material deferred tax
liability at the year end.
11 Financial assets at fair value through profit or loss
2020 2019
US$'000 US$'000
Fair value at beginning of year - 207
Additions - 317
Reclassification to associate investment - (524)
Fair value at year end - -
========= =================
On 29 April 2018 the Company entered into a subscription
agreement with Eagle Gas Limited, a UK private company. Under this
agreement the Company acquired a 14.75% interest in Eagle Gas
Limited in exchange for payment of $172,500 (GBP125,000) in cash
and the issue of 147,058,824 nil par value shares in the Company
equating to $34,500 (GBP25,000). In addition, the Company will pay
contingent consideration of a further 147,058,824 ordinary shares
in the Company upon Eagle Gas Limited continuing in the licence
P2112.
During the year to 30 April 2019 the Company increased its
holding in Eagle Gas Limited to a 25% interest. Management
considered this to provide significant influence over the entity
and the asset was reclassified to that of an associate
investment.
The Company invested into Eagle Gas Limited for two reasons: one
to access deal flow and the other to access Eagle's Badger Prospect
which holds a gross mean prospective resource of 399 billion cubic
feet of gas and 3.9 million barrels of natural gas liquids. The
licence for Badger came with a "drill or drop" commitment well to
the OGA. Eagle were actively pursuing a number of near-term
development opportunities as well as pursuing a farmout strategy on
Badger to find a 3rd party to drill the "drill or drop" commitment
well.
Eagle Gas Limited, with support from its joint venture partner
managed to secure a 3-month extension to the licence but failed in
the end to secure a farminee. The licence was subsequently dropped,
and the licence area has now been put back into the OGA's open
acreage and will be available for application in the next licencing
round. As such, the investment has been provided for in full during
the prior year.
Eagle Gas Limited's wholly owned subsidiary Holwell Resources
Limited ("Holywell") re-applied for acreage covering the Badger
prospect as well as additional complimentary areas in the 32nd
Licence Round. The OGA announced the results of the 32nd Round in
September 2020, with the Company's wholly owned subsidiary Resolute
Oil & Gas (UK) Limited and Holywell each being awarded, subject
to documentation, a 50% working interest in block 43/25 and
part-blocks 43/29, 43/30, 48/4 and 48/5. Accordingly, Advance
Energy will hold a non-operated indirect 62.5% interest in these
blocks once they have been formally issued.
During the year the Company entered into an Operating Services
& Option Agreement for production on the Betun-Selo KSO field
in Sumatra, Indonesia with PT Petroenim Betun-Selo and PT Celebes
Artha Ventura. During the year, the Company had amounts due to it
from this incremental production agreement and in the interim
financial statements for the period to 31 October 2020 it
recognised an amount of US$ 604,000 in relation to amounts owed
under this agreement. However, since this date management
determined that the Company was unlikely to receive amounts under
this agreement and so this was fully impaired at 30 April 2020. In
October 2020 the Company formally terminated the agreement, with no
amounts received under this agreement, supporting the impairment at
the year-end.
Equity investment in associate
2020 2019
US$'000 US$'000
Carrying value at beginning of year - -
Reclassification from FVTPL - 524
Impairment - (524)
Carrying value at year end - -
========= =================
12 Other investments
2020 2019
US$'000 US$'000
Value at beginning of year 267 -
Additions - 267
Impairment (267) -
Value at year end - 267
========= ========
The capitalised cost in the period related to the acquisition of
an 8% interest in the Colter project via a farm-in.
The agreement to farm-in to the Colter licences was entered into
on 20 September 2018. The cost to Advance Energy of farming into
the licence, included the funding of the back costs on the licence
(GBP45,000), together with the obligation to fund 10.67% of the
forward costs related to this well, capped at a gross cost of
GBP8.0 million. Advance Energy was responsible for funding its 8%
share of incremental costs above this cap. The Operator estimated
the well cost to be GBP7.5m (GBP800,000 net to Advance).
The licence in respect of this area renews in January 2021,
however, due to disappointing results from this area including a
failed well, management of the Company have decided not to extend
this licence and as such all historic capitalised expenditure in
relation to this amount has been written off in the year.
13 Capital and reserves
All shares are Nil Coupon fully paid and each ordinary share
carries one vote. No warrants have been exercised at the reporting
date.
Pence Share premium
Allotted, called-up and fully paid: Number per share US$'000
Balance at 30 April 2018 9,662,162,387 13,377
----------------- ----------- --------------
Over accrual for Cost of Issue from
previous placing 11
10/07/2018 - Equity Placing 5,000,000,000 0.020 1,297
Cost of issue - - (126)
25/07/2018 - Consideration shares* 2,941,176 - 45
Consolidation of ordinary shares (14,368,919,140) - -
at 9 August 2018
01/10/2018 - Equity Placing 69,565,217 1.150 1,048
Cost of issue - - (118)
17/12/2018 - Consideration shares* 15,998,439 - 118
27/02/2019 - Equity Placing 222,222,222 0.450 1,324
Cost of issue - - (98)
Balance at 30 April 2019 603,970,301 16,878
Adjustment in shares issued (131) - -
02/07/2019 - Equity Placing 373,333,333 0.150 705
Cost of issue - - (73)
11/07/2019 - Equity Placing 66,666,666 0.150 126
Cost of issue - - (6)
23/12/2019 - Equity Placing 166,666,667 0.150 320
Cost of issue - - (16)
04/02/2020 - Equity Placing 349,999,998 0.150 683
Removal of warrants 48
Balance at 30 April 2020 1,560,636,834 18,665
----------------- ----------- --------------
14 Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method.
2020 2019
US$'000 US$'000
Trade payables 299 512
Accruals and other payables 24 341
-------- --------
323 853
======== ========
15 Risk Management
Financial Risks
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency exchange risk and
interest rate risk), credit risk and liquidity risk. The Board of
Directors seek to identify and evaluate financial risks.
Market risk
A. Foreign currency exchange risk
Foreign exchange risk arises because the Group entities enter
into transactions in currencies that are not the same as their
functional currencies, resulting in gains and losses on
retranslation into US Dollars. It is the Group's policy to ensure
that individual Group entities enter into local transactions in
their functional currency wherever possible and that only surplus
funds over and above working capital requirements should be
transferred to the treasury of the Parent Company. The Group and
Company considers this policy minimises any unnecessary foreign
exchange exposure. Despite this policy the Group cannot avoid being
exposed to gains or losses resulting from foreign exchange
movements, at the reporting date a 10% decrease in the strength of
the US Dollar would result in a corresponding reduction of $1,000
(2019: $18,000) in the net liabilities of the Group.
B. Cash flow interest rate risk
The Group's cash and cash equivalents are invested at short term
market interest rates. As market rates are low the Group is not
subject to significant cash flow interest rate risk and no
sensitivity analysis is provided. The Group is also not subject to
significant fair value interest rate risk. No interest rate
sensitivity has been presented in respect of the outstanding
convertible loan note as it is considered not material.
2020 2019
US$'000 US$'000
Cash & Cash Equivalents
USD 11 -
GBP 551 258
Total Financial Assets 562 258
================== ==================
Trade & other payables
USD 310 672
CHF 1 -
GBP 12 190
Other - (9)
Total Financial Liabilities 323 853
================== ==================
Credit risk
Credit risk arises on investments, cash balances and receivable
balances. The amount of credit risk is equal to the amounts stated
in the Statement of Financial Position for each of these assets.
Cash balances and transactions are limited to high-credit-quality
financial institutions. There are no impairment provisions as at 30
April 2020 (2019: nil).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities and the ability
to close out market positions. The Group has adopted a policy of
maintaining surplus funds with approved financial institutions.
Management of liquidity risk is achieved by monitoring budgets
and forecasts against actual cash flows. Where the Group entered
into borrowings during the year management monitor the repayment
and servicing of these arrangements against the contractual terms
and reviewed cash flows to ensure that sufficient cash reserves
were maintained.
Capital Risks
The Directors determine the appropriate capital structure of the
Group, specifically, how much is raised from shareholders (equity)
and how much is borrowed from financial institutions (debt), in
order to finance the Group's business strategy. The Group's policy
in the long term is to seek to maintain the level of equity capital
and reserves is to maintain an optimal financial position and
gearing ratio which provides financial flexibility to continue as a
going concern and to maximise shareholder value. The capital
structure of the Group consists of shareholders' equity together
with net debt (where relevant). The Group's funding requirements
are met through a combination of debt, equity and operational cash
flow.
16 List of subsidiaries and associates
The parent of the Group has shareholdings in the following
entities:
Name Interest Interest Country Nature of business
2020 2019 of incorporation
Corvette Energy Services (Singapore) N/A 100% Singapore Dissolved
Pte. Ltd
Resolute Oil & Gas (UK) Limited 100% 100% UK Trading subsidiary
Eagle Gas Limited 25% 14.75% UK Gas Exploration
17 Commitments
There were no capital commitments authorised by the Directors or
contracted other than those provided for in these financial
statements as at 30 April 2020 (30 April 2019: None).
At the period end the Company has the obligation under the
Corsair assignment agreement (dated 4 June 2015 and updated on 27
April 2017) to issue a further 1,875,000 shares subject to the
milestones described below being achieved:
-- (i) the acquisition by the Company of one concession in Indonesia;
-- (ii) the acquisition by the Company of a second concession in Indonesia; and
-- (iii) gross production from projects in which the Company has
an economic interest exceeding 400 barrels of oil per day for a
period of 30 days
Of the 1,875,000 shares each of Ross Warner and Simon Gorringe
would receive 25% of this amount. At the reporting date the Company
had not recorded these as a liability. Other than the Corsair
consideration options and the Corsair consideration shares there
were no other obligations to Corsair at 30 April 2020.
18 Related parties
Parties are considered to be related to the Group if the Group
has the ability, directly or indirectly, to control the party or
exercise significant influence over the party in making financial
and operating decisions, or vice versa, or where the Group and the
party are subject to common control or common significant
influence.
Related parties may be individuals (being members of key
management personnel, significant shareholders and/or their close
family members) or other entities and include entities which are
under significant influence of related parties of the Group where
those parties are individuals, and post-employment benefit plans
which are for the benefit of employees of the Group or of any
entity that is a related party of the Group.
Details of Directors remuneration are disclosed in Note 9
Directors Remuneration. For details of any related party
transactions entered into after the year-end please refer to Note
19 Subsequent Events.
As at 30 April 2020 the following balances were included in
trade and other payables and were outstanding in respect of
Directors remuneration or remuneration incurred prior to their
appointment as a Director at the year end.
Outstanding Outstanding
at 30 April at 30 April
2020 2019
US$'000 US$'000
Daniel Jorgensen 12 87
Ross Warner - 113
Simon Gorringe - 93
Graham Smith 2 -
Total Key Management 14 293
------------- -------------
19 Subsequent events
On 1 June 2020 the Company appointed Mr Stephen West as Chief
Financial Officer and Executive Director of the Company Board and
the resignation of Mr Graham Smith as Non-Executive Director with
effect from 1 June 2020. In addition, Mr Ross Warner stepped down
from his Executive Director position and assumed the role of
Non-Executive Director on the same date.
On 8 July 2020 the Company announced the granting of share
options to subscribe for 25,000,000 new ordinary shares in the
Company. The Options were granted to Chief Financial Officer and
Executive Director Stephen West under an unapproved scheme. The
Options have an exercise price of 0.3 pence per share, being a 66.7
per cent premium to the closing price immediately prior to the date
of grant, with 50% of the Options vesting on the date of grant and
the remaining 50% of the Options vesting on 1 February 2021.
Vesting of the Options is subject to the option holder providing
continuous service during the vesting period and there are no other
performance conditions attached to the Options.
On 14 September 2020 the Company announced the following in an
operations update in relation to the Company's wholly owned
subsidiary Resolute Oil & Gas (UK) Limited's 8% non-operated
working interest in the P1918 Licence: further to the completion of
an earlier appraisal drilling programme the Operator of the
licence, Corallian Energy Limited, has completed an evaluation of
the P1918 Licence and has recently recommended to the joint venture
that the licence not be renewed when the second term expires on 31
January 2021 based on the conclusion that the Colter South
discovery could not be commercially developed. Advance Energy
agrees with the Operator's recommendation.
On 7 October 2020 the Company announced that it had entered into
a Deed of Termination and Release with PT Petroenim Betun-Selo and
PT Celebes Artha Ventura in relation to the Operating Services
& Option Agreement for production on the Betun-Selo KSO field
in Sumatra, Indonesia.
Statement of Compliance with the QCA Corporate Governance
Code
(The information contained in this document was last reviewed on
30 October 2020)
In addition to information given in this Statement the Board of
Advance Energy Plc (the "Company") are continually monitoring the
position regarding the COVID-19 pandemic and will provide Company
updates via the RNS service as appropriate.
Introduction
The Board of Advance Energy Plc fully endorses the importance of
good corporate governance and applies the QCA Corporate Governance
Code, published in April 2018 by the Quoted Companies Alliance (the
"QCA Code"), which the Board believes to be the most appropriate
recognised governance code for a company of the Company's size with
shares admitted to trading on the AIM market of the London Stock
Exchange.
As Chairman, I am responsible for leading an effective board,
fostering a good corporate governance culture, maintaining open
communications with the major shareholders and ensuring appropriate
strategic focus and direction for the Company.
Notwithstanding the Board's commitment to applying the QCA Code,
we will not seek to comply with the QCA Code where strict
compliance in the future would be contrary to the primary objective
of delivering long-term value for the Company's shareholders and
stakeholders. However, we do consider that following the QCA Code,
and a framework of sound corporate governance and an ethical
culture, is conducive to long-term value creation for the Company's
shareholders.
All members of the Board believe strongly in the importance of
good corporate governance to assist in achieving objectives and in
accountability to the Company's stakeholders. In the statements
that follow, the Company explains its approach to governance in
more detail.
Principle One
Business Model and Strategy
The board of directors of the Company (the "Board") completed a
strategic review announced on 4 March 2020 with a new strategy for
the Company based on growth through acquisition or farm-in to
non-operated interests in upstream projects where there is an
opportunity to add significant value in the short to medium
term.
Unlocking hidden value is the Company's main objective - to the
benefit of shareholders as well as our joint venture partners, host
governments, and broader stakeholders.
Many upstream assets present challenges to existing operators.
These difficulties may be technical in nature, mis-alignment in the
partnership, suboptimal commercial arrangements, or simply funding
constraints.
One, or a combination, of these issues can present the
opportunity for realisation of added value. The Company looks to
identify such assets and maximise their value using unique insights
from original technical work, commercial acumen or advantaged
relationships.
The Company seeks to take non-operated interests in joint
ventures, ideally with only two parties, with the ability to exert
a significant degree of influence.
The Company only works with established operators eliminating
many of the execution risks present for typical early stage, high
growth companies, and can focus on what really adds value rather
than day-to-day operational concerns. There is no need to build a
large and complex organisation, keeping overheads low and
preserving value for shareholders.
Principle Two
Understanding Shareholder Needs and Expectations and Build
Trust
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders. Institutional
shareholders and analysts have the opportunity to discuss issues
and provide feedback at meetings with the Company. The Company is
required to hold an Annual General Meeting ("AGM") in each year,
which gives investors the opportunity to enter into dialogue with
the Board and for the Board to receive feedback and take action if
and when necessary. Where voting decisions are not in line with the
Company's expectations the Board intends to engage with those
shareholders to understand and address any issues as appropriate.
Investors also have access to current information on the Company
though its website.
Shareholders can engage with the Company through its email
address info@advanceplc.com and @advanceplc on Twitter.
Investors also have access to current information on the Company
through its website, www.advanceplc.com .
Principle Three
Considering wider stakeholder and social responsibilities
The Board is aware that engaging with its stakeholders
strengthens relationships and assists it to make better business
decisions to deliver its commitments. The Company's stakeholders
include shareholders, members of staff, suppliers, contractors,
regulators, and the surrounding communities where its projects are
located.
The Board is regularly updated on wider stakeholder views and
issues concerning its projects both formally at Board meetings and
informally through conversations. Engagement in this manner enables
the Board to receive feedback and equips them to make decisions
affecting the business.
The Board recognises the importance of its social
responsibilities concerning its investment decisions, and the
Company will develop projects that seek to make a contribution to
the development of communities in which they are located. In
planning its activities, the Company will give consideration to
evaluating the social impact of proposed developments with a view
to promoting where possible local employment and the delivery of
other local benefits and mitigating negative impacts to the extent
possible.
Principle Four
Risk Management
In addition to its other roles and responsibilities, the Board
is responsible for ensuring that procedures are in place and are
being implemented effectively to identify, evaluate and manage the
significant risks faced by the Company and to ensure that risk
management is reflected in Board remuneration.
The Company's focus on near term value creation means it is
easier to control risks, limiting exposure to long term commodity
price trends, as well as the potential for value to be stranded as
the result of a future changing world energy mix or climate change
initiatives.
The Group's operations expose it to a variety of risks that
include volatility of commodity prices, foreign currency
volatility, operational risks, availability of finance and
funding.
The Group has a risk management programme in place that seeks to
limit the adverse effects on the financial performance of the Group
by monitoring levels of debt finance and the related finance
costs.
Risk is monitored, assessed and managed by the Board as a whole
who are responsible for ensuring that the financial performance of
the Company is properly monitored and reported. This process
includes reviews of annual and interim accounts, results
announcements, internal control systems, procedures and accounting
policies.
The Board identifies and evaluates financial risks in close
co-operation with the managers who are a highly experienced team
who can focus on the key issues to maximise value and de-risk
Company projects.
The key risk factors for the Company are contained in pages
29-30 of the Company's 2020 Annual Report and Accounts ("2020
Accounts").
Principle Five
A Well Functioning Board of Directors
The Board comprises, Mark Rollins non-executive Chairman and
director, Leslie Peterkin Chief Executive Officer and executive
director, Stephen West Chief Financial Officer and executive
director and Ross Warner non-executive director. Executive and
Non-Executive Directors are subject to re-election at the Company's
AGM in accordance with the Company's Articles of Association. The
letters of appointment of all Directors are available for
inspection at the Company's registered office during normal
business hours. The Directors are expected to provide as much time
to the Company as is required. The Board elects a Non-Executive
Chairman to chair every meeting.
All the Directors biographies are published on the Company's
website and outlined below:
https://www.advanceplc.com/about-us/board-management/
The function of the Board is supported by an audit committee and
a remuneration committee. These committees were formed and
constituted on the 7 October 2020 by a Board resolution. The
Company will monitor and review the need to form any further
committees as required.
The Board has also agreed that appointments to the Board are
made by the Board as a whole and so has not created a Nominations
Committee. The Board shall review further appointments as scale and
complexity grows.
The Board aims to hold monthly meetings. A schedule of
attendance at Board meeting is outlined as follows:
Board Meetings Attendance
Board Date Simon Graham Ross Robert Mark Leslie
Meetings Gorringe(1) Smith(3) Warner Arnott(1) Rollins(2) Peterkin(2)
1 2 May 2019 X X X -
------------ ------------- ---------- -------- ----------- ------------ -------------
2 29 May 2019 X X X -
------------ ------------- ---------- -------- ----------- ------------ -------------
3 25 Jun 2019 X X X -
------------ ------------- ---------- -------- ----------- ------------ -------------
4 2 Jul 2019 X X X -
------------ ------------- ---------- -------- ----------- ------------ -------------
5 24 Sept X X X X
2019
------------ ------------- ---------- -------- ----------- ------------ -------------
6 4 Oct 2019 X X X X
------------ ------------- ---------- -------- ----------- ------------ -------------
7 29 Oct 2019 X X X X
------------ ------------- ---------- -------- ----------- ------------ -------------
8 23 Dec 2019 X X X -
------------ ------------- ---------- -------- ----------- ------------ -------------
9 24 Dec 2019 X X X -
------------ ------------- ---------- -------- ----------- ------------ -------------
10 20 Jan 2020 X - X X
------------ ------------- ---------- -------- ----------- ------------ -------------
11 3 Feb 2020 X X X X
------------ ------------- ---------- -------- ----------- ------------ -------------
12 4 Feb 2020 X X X X
------------ ------------- ---------- -------- ----------- ------------ -------------
13 7 Feb 2020 - X X - X X
------------ ------------- ---------- -------- ----------- ------------ -------------
14 10 Mar 2020 - X X - X X
------------ ------------- ---------- -------- ----------- ------------ -------------
15 7 Apr 2020 - X X - X X
------------ ------------- ---------- -------- ----------- ------------ -------------
(1) Resigned 4 Feb 2020
(2) Appointed 4 Feb 2020
(3) Resigned 1 June 2020
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of four Directors. On the 4
February 2020, the Company announced Board changes, with the
appointment of Mark Rollins as the non-executive Chairman and
Leslie Peterkin as the Chief Executive Officer and executive
director. On the same day Simon Gorringe and Robert Arnott stepped
down from their roles as CEO and Chairman respectively.
Furthermore, on the 1 June 2020, the Company announced a further
Board re-organisation with the appointment of Stephen West as the
Chief Financial Officer and executive director and the resignation
of Graham Smith as non-executive director of the Company.
The Board believes that the current balance of skills of the
Directors reflects a very broad range of commercial and
professional skills across geographies and industries that is
necessary to ensure the Company is equipped to deliver is strategy
and notes that each of the Director's has experience in public
markets.
The Directors keep their knowledge and expertise current through
their intensive involvement in industry affairs. Additionally, the
Directors receive ad hoc guidance on certain matters concerning the
AIM Rules for Companies from the Company's Nomad as well as
receiving updates on the regulatory environment from FIM Capital
Limited ("FIM").
Full Biographies of the Board are available on the Company's
website www.advanceplc.com
The Company has engaged the outsourced services of FIM to
provide Company secretarial, specialist administration and
accounting services to the Company.
Aside from FIM performing the role of Company Secretary,
administrator and accountant, the Board does not have any other
particular internal advisory responsibilities.
On the 4 February 2020 the Company announced the appointment of
John Battrick as the Company's Technical Manager. John is a
geoscientist and has worked in the E&P sector for five decades
for a number of international oil companies.
On the 1 May 2020 the Company announced that it had entered into
a Master Service Agreement with Xodus Group Limited ("Xodus") for
technical and advisory services. Xodus provides engineering and
advisory services to clients in the oil and gas, LNG, renewables
and utilities industries worldwide and provides evaluation and due
diligence work related to ongoing Company projects.
Principle Seven
Evaluation of Board Performance
There is no formal Board or director evaluation system in place,
however, there is an internal evaluation of the Board and
individual directors undertaken on an ad hoc basis in the form of
peer appraisal and discussions to determine the effectiveness and
performance as well as the directors' continued independence. This
process can be regular as part of the board meeting process or ad
hoc when the director or Board deem it necessary.
The results and recommendations that come out of the appraisals
for the directors shall identify the key corporate and financial
targets that are relevant to each director and their personal
targets in terms of career development and training. Progress
against previous targets shall also be assessed where relevant.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and
risk will impact the corporate culture of the Company as a whole
and that this will impact the performance of the Company. The Board
is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Company as a whole and the way
that employees behave. The corporate governance arrangements that
the Board has adopted are designed to ensure that the Company
delivers long term value to its shareholders and that shareholders
have the opportunity to express their views and expectations for
the Company in a manner that encourages open dialogue with the
Board.
The Company maintains an open and respectful dialogue with
employees, partners and other stakeholders. Therefore, the
importance of sound ethical values and behaviours is crucial to the
ability of the Company to successfully achieve its corporate
objectives. The Board places great importance on this aspect of
corporate life and seeks to ensure that this flows through all that
the Company does. The Directors consider that at present the
Company has an open culture facilitating comprehensive dialogue and
feedback and enabling positive and constructive challenge.
The Company has put policies in place that communicate
disciplinary policies clearly; ensures every employee knows the
consequences of unethical behaviour; ensures its employees can
report misconduct anonymously and has a confidential complaint
process in place.
The Company has adopted, with effect from the date on which its
shares were admitted to AIM, a code for Directors' and employees'
dealings in securities which is appropriate for a company whose
securities are traded on AIM and is in accordance with the
requirements of the Market Abuse Regulation.
Principle Nine
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company's activities
rests with the Board and the respective responsibilities of the
Non-Executive Chairman. The Board has adopted appropriate
delegations of authority which set out matters which are reserved
to the Board.
The Non-Executive Chairman is responsible for the effectiveness
of the Board together with the responsibility to oversee the
Company's corporate governance practices.
As previously stated in Principle 5 above, the Board formed an
audit committee and remuneration committee on 7 October 2020. In
view of the size of the Company, it was deemed unnecessary to form
a nominations committee at this time. Instead, the Board as a whole
carries out the duties that would sometimes be delegated to a
Nominations Committee. The Company will monitor and review the need
to form a Nominations Committee to support the function of the
Board.
Role of the Audit Committee : the Audit Committee comprises Ross
Warner, as Chairman and Mark Rollins. The Audit Committee receives
and reviews reports from management and from Lubbock Fine relating
to the interim and annual accounts and to the system of internal
financial control.
The Audit Committee is responsible for assisting the Board's
oversight of the integrity of the financial statements and other
financial reporting, the independence and performance of Lubbock
Fine, the regulation and risk profile of the Group and the review
and approval of any related party transactions. The Audit Committee
may hold private sessions with management and Lubbock Fine without
management present. Further, the Audit Committee is responsible for
making recommendations to the Board on the appointment of Lubbock
Fine and the audit fee and reviews reports from management and
Lubbock Fine on the financial accounts and internal control systems
used throughout the Company and the Group.
The Audit Committee will aim to meet at least three times a year
and is responsible for ensuring that the Group's financial
performance is properly monitored, controlled and reported. The
Audit Committee is responsible for the scope and effectiveness of
the external audit and compliance by the Group with statutory and
other regulatory requirements. FIM prepares the minutes and
circulates agendas for meetings. The auditors will be invited to
meetings when required, at least once annually ahead of the
approval of the annual financial statements.
With respect to Lubbock Fine , the Audit Committee:
-- monitors in discussion with Lubbock Fine the integrity of the
financial statements of the Company and the Group, any formal
announcements relating to the Company's and Group's financial
performance and reviews significant financial reporting judgments
contained in them;
-- reviews the Group's internal financial controls and reviews
the Group's internal control and risk management systems;
-- considers annually whether there is a need for an internal
audit function and makes a recommendation to the Board;
-- makes recommendations to the Board for it to put to the
shareholders for their approval in the general meeting, in relation
to the appointment, re-appointment and removal of Lubbock Fine and
to approve the remuneration and terms of engagement of Lubbock Fine
;
-- reviews and monitors Lubbock Fine 's independence and
objectivity and the effectiveness of the audit process, taking into
consideration relevant professional and regulatory
requirements;
-- develops and implements policy on the engagement of Lubbock
Fine to supply non-audit services, taking into account relevant
external guidance regarding the provision of non-audit services by
Lubbock Fine ; and
-- reports to the Board, identifying any matters in respect of
which it considers that action or improvement is needed and making
recommendations as to the steps to be taken.
The Audit Committee also reviews arrangements by which the staff
of the Company and the Group may, in confidence, raise concerns
about possible improprieties in matters of financial reporting or
other matters and ensure that arrangements are in place for the
proportionate and independent investigation of such matters with
appropriate follow-up action. Where necessary, the Audit Committee
will obtain specialist external advice from appropriate
advisers.
Role of the Remuneration Committee : the Remuneration Committee
comprises Ross Warner, as Chairman and Mark Rollins .
The Remuneration Committee is responsible for considering all
material elements of remuneration policy, the remuneration and
incentivisation of Executive Directors and senior management (as
appropriate) and to make recommendations to the Board on the
framework for executive remuneration and its cost. The role of the
Remuneration Committee is to keep under review the Company's
remuneration policies to ensure that the Company attracts, retains
and motivates the most qualified talent who will contribute to the
long-term success of the Company. The Remuneration Committee also
reviews the performance of the CEO and CFO and sets the scale and
structure of their remuneration, including the implementation of
any bonus arrangements, with due regard to the interests of
shareholders.
The Remuneration Committee is also responsible for granting
options under the Company's share option plan and, in particular,
the price per share and the application of the performance
standards which may apply to any grant, ensuring in determining
such remuneration packages and arrangements, due regard is given to
any relevant legal requirements, the provisions and recommendations
in the AIM Rules and the QCA Code.
The committee will aim to meet up to two times per annum.
Appointments to the committee will be made by recommendation of the
Board. No further appointments are expected until the number of
NEDs on the Board increases.
The Remuneration Committee:
-- determines and agrees with the Board the framework or broad
policy for the remuneration of the CEO and CFO;
-- determines the remuneration of Non-Executive Directors;
-- determines targets for any performance-related pay schemes
operated by the Company and the Group ;
-- ensures that contractual terms on termination and any
payments made are fair to the individual, the Company and the Group
, that failure is not rewarded and that the duty to mitigate loss
is fully recognised;
-- determines the total individual remuneration package of the
CEO and CFO, including bonuses, incentive payments and share
options;
-- is aware of and advises on any major changes in employees'
benefit structures throughout the Company and the Group ;
-- ensures that provisions regarding disclosure, including
pensions, as set out in the (Directors' Remuneration Policy and
Directors' Remuneration Report) Regulations 2019, are fulfilled;
and
-- is exclusively responsible for establishing the selection
criteria, selecting, appointing and setting the terms of reference
for any remuneration consultants who advise the Remuneration
Committee.
The services of each of the Board members as directors are
provided under the terms of their letters of appointment. The
responsibilities of the board members are outlined in the Accounts
and summarised below.
The directors are responsible for maintaining proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Isle of Man Companies Act
2006. They are also responsible for the system of internal control,
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Whilst there are no formal adoption of matters reserved for the
Board, the Directors review and approve the following:
-- Strategy and management
-- Policies and procedures
-- Financial reporting and controls
-- Capital structure
-- Contracts
-- Shareholder documents / Press announcements
-- Adherence to Corporate Governance and best practice procedures
The structures and risk appetite disclosures on the website and
the Accounts are deemed sufficient in relation to the size and
strategy of the Company.
Non-Executive Directors
The Board has adopted guidelines for the appointment of
Non-Executive Directors which have been in place and which have
been observed throughout the year. These provide for the orderly
and constructive succession and rotation of the Non-Executive
Chairman and non-executive directors insofar as both the
Non-Executive Chairman and non-executive directors will be
appointed for an initial term of three years and may, at the
Board's discretion, believing it to be in the best interests of the
Company, be appointed for subsequent terms. Mark Rollins will be
submitted for re-election as a director and Ross Warner who retires
by rotation at the commencement of the 2020 AGM will submit himself
for immediate reappointment to the Board, as will all directors at
subsequent AGMs in accordance with the Company's articles of
association. The Non-Executive Chairman may serve as a
Non-Executive Director before commencing a first term as
Non-Executive Chairman.
Principle 10
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
The information provided to shareholders regarding updates on
the Company via regulatory announcements are also considered to be
sufficient, taking into consideration the size and low activity
level of the Company.
The Company communicates with shareholders through the Accounts,
full-year and half-year announcements, the shareholders meetings
and investors can email the directors and Company Secretary with
any queries they may have. The Company maintains an enquiries email
address ( info@advanceplc.com ) and has a twitter account
(@advanceplc), details of which are displayed on its website.
All historical information is maintained on the website along
with shareholder updates.
The Company's financial reports and notices of General Meetings
of the Company for the last five years can be found here
http://www.advanceplc.com/investor-relations/corporate-documents/
The outcome of all resolutions tabled at general meetings are to
be posted on the Company's website and also announced via RNS.
If a significant proportion of independent votes were to be cast
against a resolution at any general meeting, the Board's policy
would be to engage with the shareholders concerned in order to
understand the reasons behind the voting results.
CORPORATE INFORMATION
Directors Mark Rollins
Leslie Peterkin
Ross Warner
Stephen West
Company Number 010493V
Registered Office 55 Athol Street
Douglas
Isle of Man
IM1 1LA
Independent Auditors Lubbock Fine
Paternoster House
65 St Paul's Churchyard
London EC4M 8AB
Administrator FIM Capital Limited
55 Athol Street
Douglas
Isle of Man
IM1 1LA
Stock Exchange Listing AIM, London Stock Exchange
Ticker code: ADV
Nominated Advisor Beaumont Cornish Limited
Building 3
566 Chiswick High Road
London
W4 5YA
Joint Brokers Optiva Securities Limited
49 Berkeley Square
London
W1J 5AZ
Novum Securities Limited
10 Grosvenor Gardens
London
SW1W 0DH
NOTE TO THE ANNOUNCEMENT
The financial information set out in this announcement does not
constitute the Group's statutory financial statements for the year
ended 31 April 2020 or 2019, but is derived from these financial
statements. The Auditors have reported on these financial
statements; their reports were unqualified but did include a
reference to a material uncertainty relating to going concern.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR UROSRRUUROAA
(END) Dow Jones Newswires
October 30, 2020 10:37 ET (14:37 GMT)
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