Andalas Energy and
Power Plc
Final Results
31 October 2017
Andalas Energy and
Power Plc
(‘Andalas’ or the
‘Company’)
Final Results
Andalas Energy and Power Plc, the AIM listed Indonesian focused
energy company (AIM: ADL), is pleased to announce its results for
the year ending 30 April 2017. The
Annual Report and Accounts will be posted to shareholders and will
be made available on the Company’s website:
http://www.andalasenergy.co.uk.
Highlights:
- Two agreements secured for the development of wellhead IPP
projects with major partners:
- October 2017 entered into a
memorandum of understanding with PT Pertamina Power Indonesia and
Siemens AG for the development of a further wellhead IPP project at
the Puspa gas field in Sumatra
- August 2017 entered into
consortium agreement with PT PP Energi for the development of a
wellhead IPP in Sumatra known as
Jambi-1
- Pipeline of further potential projects identified with both
Pertamina and third-parties across Indonesia that is expected to be suitable for
development as a wellhead IPP.
- Board changes announced today reflecting the change from
business development to operational delivery.
CHAIRMAN’S
REPORT
Andalas’ vision is to be the leading
developer of wellhead located, independent power producers
(“wellhead IPPs”) in our target market of Indonesia. We aim
to secure low cost, reliable and sustainable gas supplies and to
deliver low-cost, reliable and sustainable power from wellhead IPPs
in a way that adds value to all stakeholders.
Our strategy is to:
•
identify and secure gas resources suitable for supplying gas to a
wellhead IPP;
•
create a buyer for those gas resources by developing wellhead
IPPs;
•
acquire and develop gas resources as part of an integrated upstream
and IPP project if it enables the IPP project to proceed, or
de-risks delivery of the gas to the IPP or enhances returns to
Andalas; and
•
sell interests in the IPPs and the upstream developments.
Andalas is making material progress in
delivering this strategy.
In August
2017, Andalas announced that it had executed a consortium
agreement with PT PP Energi (“PPE”), a subsidiary of the
state-owned enterprise, PT PP (Persero) Tbk, for the development of
a wellhead IPP in Sumatra known as
Jambi-1 and in October 2017 announced
it had entered a memorandum of understanding with PT Pertamina
Power Indonesia (“PPI”), a wholly owned subsidiary of the
state-owned oil company, PT Pertamina (Persero) (“Pertamina”), and
Siemens AG for the development of a further wellhead IPP at the
Puspa field also in Sumatra.
These agreements are the culmination of
a considerable amount of work undertaken by Andalas to identify gas
resources suitable for development as wellhead IPPs. This
work has been undertaken more recently in conjunction with PT
Pertamina EP, another wholly owned subsidiary of Pertamina, and
will continue as we seek to identify further IPP projects.
These agreements are expected to enable the project partners to
undertake the further work required to bring the projects to first
power.
In addition, the Company is continuing
to progress wellhead IPP and associated upstream opportunities
operated by non-Pertamina third parties.
The board believes that Indonesia presents an excellent opportunity
for Andalas. Indonesia’s power generation infrastructure will
need substantial investment if it is not to inhibit Indonesia’s
economic
growth. The current generation
capacity of approximately 55.5 GW is insufficient to meet the
demand for electricity from all sectors of Indonesia’s growing
population and its buoyant manufacturing industries.
The Government has announced ambitious
electrification targets. To achieve these targets, the
national electricity company, PT Perusahaan Listrik Negara (“PLN”)
and the independent power producers will need to construct material
additional generating capacity. PwC estimates in its “Power
in Indonesia” guide that this will require further investment of
US$110 billion and that, over the
next 10 years, the private sector will play a significant in the
Indonesian power sector.
The Government’s legislative
initiatives continue to promote investment in the sector. In
July 2017 the Minister of Energy and
Mineral Resources issued regulation number 45 of 2017 which
promotes the development of generating capacity situated at the
wellhead by defining the conditions which a project must meet in
order to permit PLN to procure the generating capacity by direct
appointment rather than public tender.
Overview of the year
and financial review
The Group made a loss for the year
US$4,601,000 (2016: US$4,673,000), including significant expenditure
incurred in pursuing the Group’s strategy in Indonesia that has been categorised as
business development costs totalling US$2,481,000 (2016: US$3,195,000).
This work included the completion of a
comprehensive analysis of potential gas fields that could be
suitable for an integrated gas to power development. The due
diligence work delivered the Pertamina
cooperation agreement in September 2016 and furthermore the work
undertaken on the potential gas supplies in Indonesia culminated in the identification of
the first potential project, that envisaged sourcing gas from
fields included within the Pertamina owned MJ Cluster.
During the period the Group incurred
US$173,000 (2016: US$Nil) (included
within the business development cost in the period) in respect of
the Tuba Obi East (“TOE”) planned workover programme. In
April 2017 the project was returned
to Pertamina by the operator upon expiry of the KSO licence.
TOE now comprises part of the MJ Cluster and is under consideration
for further development. Andalas believes that developing TOE
as part of the MJ Cluster is likely to lead to a better outcome for
the Company because it enables a larger integrated project and puts
the development of the upstream element in the hands of Pertamina,
which has the resources and technical capability to fully develop
it.
During the period and principally in
conjunction with the readmission to AIM on 13 May 2016, the Company issued a total of
1,775,020,674 shares at a price of 0.2
pence in settlement of the convertible loan note (£600,000
(US$856,000)), settlement of certain
share issue costs and corporate finance fees and a further placing
to raise cash of £1.72million (US$2.513million).
The period under review also included a
number of one-off expenses relating to the readmission of the
Company to AIM that completed in May 2016. The loss, thereby,
included a share based payment charge totalling US$464,000 (30 April
2016: US$347,000) in respect
of consideration payable (included in business development costs)
and US$446,000 (30 April 2016: US$Nil) relating to IPO costs
expensed following the completion of the Company’s readmission to
AIM in May 2016. Adjusting for these one-off costs the Group
generated a loss in the period of US$3,691,000 (2016: US$4,326,000), including all charges the loss for
the period was US$4,601,000
(30 April 2016: US$4,673,000).
The Group held a cash balance of
US$8,000 at 30
April 2017 (US$290,000 at 30
April 2016). In addition the Company had trade and other
payables of US$1,546,000 at
30 April 2017 (US$1,799,000 at 30 April
2016), included in this amount is a total of US$1,261,000, (2016: US$Nil) of payables
totalling US$461,000 (2016: $Nil) to
Directors, US$395,000 (2016: US$Nil)
due to key consultants and US$405,000
(2016: US$Nil) due to third parties, where each party has either
agreed to either receive equity settlement or cash at such time as
the Company has greater cash resources at its disposal.
Since the year end the Company has
strengthened its balance sheet having raised a total of
US$2.2m (£1.65m) and it has now fully
settled the loan note liability (yearend balance $649,000). The key stakeholders believe in
the future of the Company and the opportunities that the Company is
developing, accordingly they recognise that preserving its cash
whilst continuing to make operational progress is the best way to
secure the long term supportive capital that the Company will
require to fully realise its strategy.
The Company’s principal cost is its
people, therefore to preserve cash the Company’s Directors and key
consultants (“key stakeholders”) continued post year end to receive
no or partial remuneration. The agreement of the key
stakeholders to defer all or part of their remuneration alongside
the support of existing shareholder has been vital whilst Andalas
worked to secure the recently announced operational achievements;
this support is expected to continue as the Company progresses its
project offering. Eventually the outstanding remuneration to
key stakeholders will either be settled in part or in full in
exchange for equity and/or it will be deferred until such time as
the Company is generating cash flow or has sufficient resources to
afford settlement in part or in full.
The Directors believe that the
establishment of the two project development agreements, the first
with PPE and the second with PPI and Siemens, alongside the deep
inventory of project opportunities that the Group has developed
with Pertamina and third parties, has created a platform to make
Andalas successful.
The Group actively explores financing
and funding opportunities at both the project and corporate level
to support its ongoing operational and project requirements.
Naturally we are disappointed that we have to date been unable to
secure sufficient equity to meet the Company’s investment
objectives over a longer time horizon. However,
notwithstanding the capital raising challenges of the past year,
the Directors remain confident that the significance of the
opportunity being pursued, together with the current and expected
material progress in creating two project consortiums with strong
partners, will enable the Group to raise the financing required for
it to be able to finance its future working capital and development
cost requirements beyond the period of twelve months from the date
of this report.
Board changes
In securing agreements with credible
partners in Indonesia, we believe
we are transitioning from a Company that has been focussed on
business development to a Company focussed on project
execution. Today we therefore announce changes to our
board. Having now secured PPE, PPI and Siemens as
partners, I intend to step down as Chairman with immediate effect
to be replaced by David Whitby, who
will lead the Company’s efforts in maintaining and strengthening
its relationships with our core partners. Alongside
this Dr Robert Arnott will assume
the role of senior non-executive Director.
We also announce that Simon Gorringe, formerly COO, has been appointed
CEO, Simon’s experience and track record of delivering
international energy projects makes him the ideal candidate to lead
the next phase of the Company’s journey.
Outlook
We believe that we have a business that
is now entering an exciting period as we seek to execute the work
necessary for each of the Company’s projects to reach final
investment decision (“FID”), a process against which we continue to
announce progress. Furthermore the Company anticipates
growing the number of projects under development steadily as it
converts its opportunity pipeline into live projects.
Paul
Warwick
Non-Executive Chairman
30 October 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
YEAR ENDED 30 APRIL 2017
|
Note |
2017
$’000s |
|
2016
$’000s |
|
|
|
|
|
|
|
|
|
|
Impairment of
financial assets |
10 |
- |
|
(179) |
Asset evaluation and
gas to power expenses |
4 |
(2,481) |
|
(3,195) |
Readmission costs |
4 |
(446) |
|
- |
Other administrative
expenses |
4 |
(1,390) |
|
(970) |
Total administrative
expenses |
4 |
(4,317) |
|
(4,344) |
Operating
loss |
|
(4,317) |
|
(4,344) |
Finance income |
3 |
- |
|
4 |
Finance costs |
3 |
(284) |
|
(333) |
Loss before
tax |
|
(4,601) |
|
(4,673) |
Tax expense |
9 |
- |
|
- |
Loss after tax
attributable to owners of the parent |
|
(4,601) |
|
(4,673) |
Total comprehensive loss for the year attributable to owners of
the parent |
|
(4,601) |
|
(4,673) |
Basic and diluted loss per share attributable to owners of the
parent during the year (expressed in US cents per share) |
6 |
(0.19) |
|
(0.69) |
The Statement of Comprehensive Income has been prepared on the
basis that all operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL
2017
|
Note |
|
2017
$’000s |
2016
$’000s |
Assets |
|
|
|
|
Non-current
assets |
|
|
|
|
Financial assets at
fair value through profit or loss |
10 |
|
- |
- |
Total non-current
assets |
|
|
- |
- |
|
|
|
|
|
Current
assets |
|
|
|
|
Other receivables |
11 |
|
158 |
885 |
Cash and cash
equivalents |
|
|
8 |
290 |
Total current
assets |
|
|
166 |
1,175 |
Total
assets |
|
|
166 |
1,175 |
|
|
|
|
|
Liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Trade and other
payables |
12 |
|
(1,546) |
(1,799) |
Borrowings |
15 |
|
(649) |
(876) |
Total
liabilities |
|
|
(2,195) |
(2,675) |
|
|
|
|
|
Net
(liabilities) |
|
|
(2,029) |
(1,500) |
|
|
|
|
|
Equity attributable to the owners of the parent |
|
|
|
Share premium |
14 |
|
10,084 |
6,124 |
Accumulated
deficit |
|
|
(12,113) |
(7,624) |
Total
(deficit) |
|
|
(2,029) |
(1,500) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 APRIL
2017 |
|
|
Share premium |
Accumulated
deficit |
Total
equity |
|
$’000s |
$’000s |
$’000s |
Balance at 1 May
2015 |
3,616 |
(3,104) |
512 |
Loss for the year |
- |
(4,673) |
(4,673) |
Total comprehensive
income |
- |
(4,673) |
(4,673) |
Transactions with
equity shareholders of the parent |
|
|
|
Proceeds from shares
issued |
2,681 |
- |
2,681 |
Cost of share
issue |
(173) |
- |
(173) |
Share warrants
issued |
- |
153 |
153 |
Balance at 30 April
2016 |
6,124 |
(7,624) |
(1,500) |
Loss for the year |
- |
(4,601) |
(4,601) |
Total comprehensive
income |
- |
(4,601) |
(4,601) |
Transactions with
equity shareholders of the parent |
|
|
|
Proceeds from shares
issued |
2,513 |
- |
2,513 |
Share based payments
and other share issues |
1,749 |
- |
1,749 |
Settlement of loan
note |
856 |
- |
856 |
Cost of share
issues |
(1,158) |
- |
(1,158) |
Share warrants
issued |
- |
112 |
112 |
Balance at 30 April
2017 |
10,084 |
(12,113) |
(2,029) |
|
|
|
|
|
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 30
APRIL 2017
|
Note |
2017
$’000s |
|
2016
$’000s |
Cash flows from
operating activities: |
|
|
|
|
Net loss for the
year |
|
(4,601) |
|
(4,673) |
Adjustments
for: |
|
|
|
|
Share-based
payment |
|
464 |
|
527 |
Finance cost |
3 |
284 |
|
333 |
Finance income |
3 |
- |
|
(4) |
IPO
costs |
|
230 |
|
- |
Unrealised loss/ (gain) from financial assets at fair
value through profit or
loss |
|
- |
|
179 |
Change in
working capital items: |
|
|
|
|
Decrease/(Increase) in other receivables |
11 |
619 |
|
(863) |
Increase in trade and
other payables |
12 |
294 |
|
1,576 |
Net cash used in
operations |
|
(2,710) |
|
(2,925) |
Cash flows from
investing activities |
|
|
|
|
Finance income |
3 |
- |
|
4 |
Net cash from
investing activities |
|
- |
|
4 |
Cash flows from
financing activities |
|
|
|
|
Proceeds from issue of
share capital |
14 |
2,513 |
|
2,487 |
Share issue costs |
14 |
(495) |
|
(173) |
Proceeds from
borrowings |
15 |
502 |
|
704 |
Cost of
borrowings |
15 |
(37) |
|
(87) |
Finance costs |
|
(7) |
|
(10) |
Net cash generated by
financing activities |
|
2,476 |
|
2,921 |
Net decrease in
cash and cash equivalents |
|
(234) |
|
- |
Cash and cash
equivalents, at beginning of the year |
|
290 |
|
354 |
Effect of foreign
exchange rate changes |
3 |
(48) |
|
(64) |
Cash and cash
equivalents, at end of the year |
|
8 |
|
290 |
Major Non Cash Transactions
Details of major non-cash transactions are described in note 13
share based payments, in note 14 share capital and note 15
borrowings.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 30
APRIL 2017
1.
General information
The principal activity of Andalas Energy and Power PLC (‘the
Company’) during the year was as an energy business focussed on the
Republic of Indonesia. As at the year end, the Company was
domiciled in the Isle of Man and listed on the AIM market of the
London Stock Exchange.
2.
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated. The Group financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards IFRSs and IFRIC interpretations,
issued by the International Accounting Standards Board (IASB) as
endorsed for use in the EU ('IFRSs') and those parts of the Isle of
Man company law that are applicable to companies that prepare their
financial statements under IFRS.
The financial information for the years ended 30 April 2017 and 30 April
2016 does not constitute statutory accounts but is extracted
from the audited accounts for those years. The auditor's report on
the 30 June 2016 financial statements
was unqualified. The auditor's report on the 30 June 2017 financial statements was unqualified
although an emphasis of matter was included in the accounts to draw
attention to going concern.
The financial statements have been prepared on a going concern
basis. The Company raises money to support its corporate overheard,
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 on going
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 income
stream from the development of its independent power projects and
its agreements to develop projects under two consortiums, the
continued deferral of remuneration by the Directors and senior
consultants, 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; 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.
3.
Finance income and Finance costs
|
|
|
Year ended 30 April
2017 |
Year ended 30 April
2016 |
Finance income |
|
|
$’000 |
$’000 |
Income on cash and cash
equivalents |
|
|
- |
4 |
|
|
|
- |
4 |
Finance expense |
$’000 |
$’000 |
Bank charges and finance expense on
borrowings |
173 |
236 |
Foreign exchange loss |
111 |
97 |
|
284 |
333 |
4.
Administration expenses
Administration fees and expenses consist of the following:
|
2017 |
|
2016 |
|
$’000 |
|
$’000 |
Audit fees |
34 |
|
20 |
Professional fees |
360 |
|
306 |
Administration
costs |
42 |
|
34 |
Share based payment
expense (Note 7) |
- |
|
180 |
Sundry expenses |
26 |
|
60 |
Directors’ fees (Note
7) |
928 |
|
370 |
Total corporate
overhead |
1,390 |
|
970 |
Sundry expenses |
- |
|
44 |
Office costs |
80 |
|
40 |
Professional fees |
51 |
|
68 |
Consulting
expenses |
1,439 |
|
2,051 |
Travel and
accommodation |
447 |
|
645 |
Share based payment
expense (Note 13 and 14) |
464 |
|
347 |
Asset evaluation
and gas to power business expenses |
2,481 |
|
3,195 |
Readmission costs |
446 |
|
- |
Impairment – Peelwood
(Note 10) |
- |
|
179 |
Total |
4,317 |
|
4,344 |
Share based payment expense includes
$112,457 (2016: Nil) relating to
options granted to advisors as described in note 13 and
$351,040 (2016: Nil ) relating to the
issue of shares in settlement of Corsair carried interest as
described in note 14 and $Nil (2016: $347,000) relating to option charge and shares
granted under Corsair assignment agreement as disclosed in the
prior year notes 13 and 14.
5.
Segmental analysis
In the opinion of the Directors, the operations of the Group
comprise one single operating segment comprising that of developer
of gas to power projects in the Republic of Indonesia. The
Group only has one reportable segment and the Directors consider
that the primary financial statements presented substantially
reflect all the activities of this single operating
segment.
6.
Loss 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.
|
2017
$’000s |
2016
$’000s |
Loss
attributable to owners of the
Group |
(4,601) |
(4,673) |
Weighted
average number of ordinary shares in issue (thousands) |
2,420,989 |
678,188 |
Loss per
share (US cents) |
($0.19) |
($0.69) |
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 13, 14 and 15.
Details of shares issued post year end are disclosed in note
19.
7.
Staff Costs (including Directors)
The group employed an average of 6 individuals during the year,
including the directors (2016: 3).
|
|
|
2017 |
2016 |
|
|
|
$’000 |
$’000 |
Directors’ remuneration |
|
|
928 |
370 |
Share based payments |
|
|
- |
180 |
|
|
|
928 |
550 |
Key management of the Group are considered to be the Directors
and the remuneration of those in office during the year was as
follows:
|
Short term employee
benefits |
Social security
payments |
Total
2017 |
Short term employee
benefits |
Share based
payments |
Total
2016 |
|
$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
David Whitby
(2) |
240 |
- |
240 |
263 |
74 |
337 |
Paul Warwick (1) |
60 |
8 |
68 |
- |
24 |
24 |
Daniel Jorgensen (1) |
180 |
25 |
205 |
- |
82 |
82 |
Ross Warner (2) |
180 |
- |
180 |
- |
- |
- |
Simon Gorringe (2) |
180 |
- |
180 |
- |
- |
- |
Graham Smith (1) |
13 |
- |
13 |
- |
- |
- |
Robert Arnott (1) |
37 |
5 |
42 |
- |
- |
- |
Cameron Pearce (3) |
- |
- |
- |
89 |
- |
89 |
Jeremy King (3) |
- |
- |
- |
18 |
- |
18 |
Total Key Management |
890 |
38 |
928 |
370 |
180 |
550 |
Analysis of
contractual entitlement: |
|
|
|
|
|
Cash settled in period |
459 |
- |
459 |
370 |
- |
370 |
Outstanding at year end |
431 |
38 |
469 |
- |
180 |
180 |
Total Key Management |
890 |
38 |
928 |
370 |
180 |
550 |
(1) Certain Directors elected to defer settlement of
100% of their 2017 salary during the year.
(2) Certain Directors elected to defer settlement of
25% of their 2017 salary during the year.
(3) Resigned 8 December
2015
As at the 30 April 2016 the
Company had agreed, that subject to shareholder approval, it would
issue shares equivalent to the share based payments disclosed
above, at a price of 0.2pence per
share. On 13 May 2016 the
resolutions were passed and the shares were issued as disclosed in
note 14.
8.
Financial Risk Management
The Group’s activities expose it to a variety of financial
risks: market risk (including foreign currency exchange risk, price
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% increase (decrease)
in the strength of the US Dollar would result in a corresponding
reduction of $160,000 (2016:
$179,000) 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.
- Financial Risk Management (continued)
|
2017 |
|
2016 |
|
$'000 |
|
$'000 |
Cash & Cash
Equivalents |
|
|
|
USD |
7 |
|
99 |
GBP |
1 |
|
191 |
|
8 |
|
290 |
Total
Financial Assets |
8 |
|
290 |
|
|
|
|
Borrowings |
|
|
|
GBP |
649 |
|
876 |
|
649 |
|
876 |
|
|
|
|
Trade & other
payables |
|
|
|
USD |
683 |
|
881 |
AUD |
86 |
|
- |
GBP |
758 |
|
918 |
Other |
19 |
|
- |
|
1,546 |
|
1,799 |
Total
Financial Liabilities |
2,195 |
|
2,675 |
(c)
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 2017 (2016: nil).
Credit risk also arises from cash and cash equivalents. The
Group considers the credit ratings of banks in which it holds funds
in order to reduce exposure to credit risk. The Group will only
keep its holdings of cash and cash equivalents with institutions
which have a minimum credit rating of ‘B’.
(d)
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. Further detail on
liquidity risk is set out in note 2.7
Residual undiscounted contractual maturities of financial
liabilities:
|
0-3
months |
No
stated maturity |
|
$’000 |
$’000 |
30 April
2017 |
|
|
Trade and other
payables |
1,546 |
- |
Borrowings |
726 |
- |
Total |
2,272 |
- |
30 April 2016 |
|
|
|
Trade and other
payables |
1,799 |
- |
|
Borrowings |
- |
876 |
|
Total |
1,799 |
876 |
|
|
|
|
|
|
Capital Risk Management
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. As at
30 April 2017 the Group was in a net
liability position, since the year end the Group settled the
outstanding loan note and raised further equity as described in
note 19.
9. Taxation
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% (2016: 0%).
The Company has a subsidiary in Singapore and also has an investment in
Peelwood Pty Ltd (a company resident in Australia) will be subject to tax on
distributions and gains levied by those jurisdictions.
|
|
|
2017
$’000 |
2016
$’000 |
|
|
|
|
|
Current tax charge |
|
|
- |
- |
Deferred tax charge |
|
|
- |
- |
Total taxation charge |
|
|
- |
- |
Taxation reconciliation
The charge for the year can be reconciled to the loss per the
consolidated statement of comprehensive income as follows:
|
2017 |
2016 |
|
$’000 |
$’000 |
Loss before income tax |
(4,601) |
(4,673) |
|
|
|
Tax on loss at the
weighted average Corporate tax rate of 0% (2016: 0%) |
- |
- |
Total income tax expense |
- |
- |
The deferred tax asset has not been recognised for in accordance
with IAS 12. The Group does not have a material deferred tax
liability at the year end.
- Financial assets at fair value through profit or
loss
|
30 April
2017 |
30 April
2016 |
|
US$’000 |
US$’000 |
Fair value at beginning of
year |
- |
179 |
Impairment |
- |
(179) |
Fair value at year end |
- |
- |
On 18 December 2013 the Company
entered an Option Agreement with ASX-listed Company Balamara
Resources to farm into its Peelwood concession located in NSW,
Australia. Under the agreement the
Company, could earn into 49% of Peelwood. This option was partly
exercised on 28 January 2014 earning
the Company 20% of the concession at a cost of AUD 200,000 or
US$179,000. Further rights to
exercise options have now lapsed. The investment was provided for
in full during the prior year.
a) Fair
value estimation
Financial instruments held by the Group carried at fair value
comprise one unquoted investment, valued in accordance with the
accounting policy set out in Note 2.9.
The Group measures fair value by using the following fair value
hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: Inputs other than quoted prices included within
level 1 that are observable for the asset or liability either
directly (that is, as prices) or indirectly (that is, derived from
prices); and
Level 3: Inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs).
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques.
These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity
specific estimates. Where investments have recently been made the
cost of the transaction is deemed the best evidence of market value
in the absence of any significant changes. If all significant
inputs required to fair value an instrument are observable, the
instrument is included in level 2; otherwise they are classified as
level 3.
All the Group’s investments are included within level 3 and are
designated financial assets at fair value through profit or
loss:
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 liabilities |
Nature of investment |
Fair
value as at 30 April 2017 |
Fair
value as at 30 April 2016 |
Valuation techniques and key inputs |
Significant unobservable input |
Financial assets at fair value through profit or loss |
20% of
equity investment in Peelwood Pty Ltd |
USD
Nil |
USD
Nil |
Purchase price and market knowledge |
Expected realisable value from sale |
The Directors have considered the carrying value of the Peelwood
interest and have decided to provide against it in full being their
estimated realisable value from sale.
11.
Other receivables
|
|
|
2017 |
2016 |
|
|
|
$’000 |
$’000 |
|
|
|
|
|
Other receivables and
prepayments |
|
|
158 |
885 |
The fair values are as stated above equate to their carrying
values as at the year end. The financial assets were not past
due and were not impaired and were all denominated in US$.
Included in other receivables and prepayments is an amount of $Nil
(2016: $698,760) in connection with
prepaid expenses relating to the publication of the AIM
re-admission document.
12. Trade and
other payables
|
|
|
2017 |
2016 |
|
|
|
$’000 |
$’000 |
|
|
|
|
|
Trade payables |
|
|
1,012 |
1,202 |
Accruals and other payables |
|
|
534 |
597 |
Trade payables and accruals |
|
|
1,546 |
1,799 |
13. Share based
payments
The following is a summary of the share options and warrants
outstanding and exercisable as at 30 April
2017 and 30 April 2016 and the
changes during each year:
|
Number of options and warrants |
Weighted average exercise price (Pence) |
Outstanding and
exercisable at 1 May 2015 |
68,250,464 |
0.945 |
Options granted as
consideration |
34,344,865 |
0.400 |
Outstanding and
exercisable at 30 April 2016 |
102,595,329 |
0.762 |
Options granted as
consideration |
66,666,666 |
0.220 |
Lapsed options |
(25,000,000) |
(0.175) |
Outstanding and
exercisable at 30 April 2017 |
144,261,995 |
0.612 |
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
2015 |
Issued |
30
April 2016 |
Issued |
Expired |
30
April
2017 |
Exercise Price |
Warrants |
|
|
|
|
|
|
|
|
07.12.
13 |
07.12.18 |
10,839,750 |
- |
10,839,750 |
- |
- |
10,839,750 |
2.00p |
24.01.14 |
24.01.19 |
26,410,714 |
- |
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 |
Options |
|
|
|
|
|
|
|
|
07.12.13 |
07.12.18 |
6,000,000 |
- |
6,000,000 |
- |
- |
6,000,000 |
2.00p |
04.02.15 |
04.02.17 |
25,000,000 |
- |
25,000,000 |
- |
(25,000,000) |
- |
0.175p |
05.06.15 |
05.06.18 |
- |
34,344,865 |
34,344,865 |
- |
- |
34,344,865 |
0.40p |
|
|
68,250,464 |
34,344,865 |
102,595,329 |
66,666,666 |
(25,000,000) |
144,261,995 |
|
The new options and warrants have been 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
date |
Share
price at grant |
Exercise price |
Volatility |
Option life |
Dividend yield |
Risk-free investment rate |
Fair value per option |
Current
year |
|
13.05.16 |
0.2p |
0.2p |
124% |
5
years |
0% |
3% |
0.241 cents |
|
31.01.17 |
0.14p |
0.2p |
40% |
5
years |
0% |
3% |
0.049 cents |
|
31.01.17 |
0.14p |
0.25p |
40% |
5
years |
0% |
3% |
0.037 cents |
|
31.01.17 |
0.14p |
0.30p |
40% |
5
years |
0% |
3% |
0.030 cents |
|
|
|
|
|
|
|
|
|
|
Prior
year |
|
04.02.15 |
0.175p |
0.175p |
119% |
2
years |
0% |
2.5% |
0.162 cents |
|
05.06.15 |
0.4p |
0.4p |
124% |
3
years |
0% |
3% |
0.244 cents |
|
|
|
|
|
|
|
|
|
|
|
The Group recognised $112,457
(30 April 2016: $153,000) relating to equity-settled share based
payment transactions during the year arising from Option or Warrant
grants, of which $Nil (30 April 2016:
$153,000) was expensed as a
pre-licence acquisition cost in connection with the Corsair
assignment agreement and with $Nil being expensed in relation to
Directors and consultants services (30 April
2016: $Nil). There are 103,034,596 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 interest in
projects exceeding 400BOPED. As the triggers for the grant of the
tranches have not occurred at the reporting date no share based
payment charge arises. Note 14 includes details of additional
share consideration paid in the year.
For the share options and warrants outstanding as at
30 April 2017, the weighted average
remaining contractual life is 2.75 years (30
April 2016: 2.02 years).
On 13 May 2016 the Company issued
one warrant for every four shares in issue at 11 May 2016.
Accordingly the Company issued 179,536,826 warrants on 13 May 2016 that were exercisable at 0.2pence per share on or before 31 May
2016. Prior to maturity 12,007,661 warrants were exercised
and issued on 31 May 2016 as
disclosed in note 14. The remainder lapsed.
Please refer to the Directors’ Report for details of shares,
options and warrants held by the Directors at 30 April 2016 and 2017. Details of warrants
and options issued post year end are included in note 19.
14. Share
capital
All shares are Nil Coupon fully paid
and each ordinary share carries one vote. No warrants have been
exercised at the reporting date.
Allotted, called-up
and fully paid: |
Number |
Pence
per share |
Share
premium
$’000s |
Balance at 30 April 2015 |
261,897,302 |
|
3,616 |
06/05/2015 – equity
placing for cash |
50,000,000 |
0.200 |
152 |
Cost of issue |
- |
- |
(9) |
05/06/2015 – equity
placing for cash |
375,000,000 |
0.400 |
2,335 |
Cost of issue |
- |
- |
(164) |
11/06/2015 –
consideration shares* |
31,250,000 |
0.400 |
194 |
Balance
at 30 April 2016 |
718,147,302 |
|
6,124 |
13/05/2016 – equity placing for cash |
825,000,000 |
0.200 |
2,405 |
13/05/2016
– equity placing with directors |
25,000,000 |
0.200 |
73 |
Cost of
issue |
- |
- |
(1,158) |
13/05/2016 – loan note settlement* |
300,000,000 |
0.200 |
856 |
13/05/2016 – share based payments*(2) |
314,750,000 |
0.200 |
898 |
13/05/2016 – settlement of Director payables (1) |
142,834,558 |
0.200 |
408 |
13/05/2016 – issue of shares in respect of Corsair settlement
(2) |
122,406,940 |
0.200 |
349 |
31/05/2016 – equity placing |
12,007,661 |
0.200 |
34 |
07/07/2016
– share based payments*(3) |
32,389,530 |
0.200 |
93 |
07/07/2016 – issue of Corsair settlement (4) |
631,984 |
0.200 |
2 |
Balance at 30 April 2017 |
2,493,167,975 |
|
10,084 |
* Non-cash item per the consolidated cash flow statement.
- Issue of shares in settlement of brought forward amounts
payable to Directors detailed in note 18.
- Issue of shares to advisors in relation to fees related to the
equity placing and the readmission.
- Issue of shares in relation in relation to settlement of third
party liabilities with shares in the company.
- Issue of shares in respect of the settlement of the Corsair
carried interest as disclosed in the Companies admission document
of 27 April 2016.
On 4 June 2015, the Company
entered into an agreement (“the agreement”) with Corsair Petroleum
(Singapore) Pte Ltd, (“Corsair”),
which was a company in which each of David
Whitby, Ross Warner and
Simon Gorringe had a 25 per cent.
beneficial interest. Following the agreement, David Whitby, previously unconnected to the
Company joined the board as Chief executive officer. This
arrangement established that Corsair would introduce oil and gas
concessions in Indonesia to the
Company and also set out the means by which Corsair was to be
remunerated for this, which was as follows:
- 31,250,000 Ordinary Shares to be issued on closing of the
Assignment Agreement and 34,344,865 Corsair Options which vest on
closing of the Assignment Agreement (issued on 06/05/2015)
- up to an additional 93,750,000 Corsair Contingent Consideration
Shares in three equal tranches (of 31,250,000 Ordinary Shares) on
the occurrence of each of the following three milestones: (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 bopd for a period of 30 days (together “the
Milestones”); and
- up to an additional 103,034,596 Corsair Options which vest in
three equal tranches of 34,344,865 upon the occurrence of each of
the milestones.
- The Agreement also contains provisions whereby Corsair will
have a carried interest in oil and gas concessions introduced by it
and a share of future revenues from these concessions. (“carried
right”)
On 27 April 2017 it was agreed
with Corsair that the carried right arrangement was to be replaced
by equity and subsequently on 13 May
2017 and 30 June 2017 the
Company issued 123,038,924 (split 122,406,940 and 631,984).
Further details of these transactions can be found in the Company’s
admission document dated 27 April 2016.
At the period end the Company continues
to have the obligation under the original Corsair assignment
agreement to issue a further 93,750,000 shares subject to the
Milestones described above being achieved but as at the reporting
date the Company had not recorded these as a liability. Other
than the Corsair consideration options (note 13) and the Corsair
consideration shares there were no other obligations to Corsair at
30 April 2017.
Subsequent to the year end the Company
issued further equity as described in note 19.
15.
Borrowings
|
Loan
note |
|
Convertible Loan |
|
2017 |
2016 |
|
2017 |
2016 |
|
$’000s |
$’000s |
|
$’000s |
$’000s |
Brought forward |
- |
- |
|
876 |
- |
Converted into
equity |
- |
- |
|
(856) |
- |
Drawdown |
502 |
- |
|
- |
704 |
Costs of issue |
(37) |
- |
|
- |
(87) |
Imputed interest
charge |
166 |
- |
|
- |
229 |
Foreign currency
effect |
18 |
- |
|
(20) |
30 |
Carried
forward |
649 |
- |
|
- |
876 |
The principal terms and the debt repayment schedule of the
Group’s unsecured loans and borrowings during the year were as
follows:
|
Currency |
Interest
rate |
Effective interest rate |
Date of
maturity |
Loan
note |
GBP |
Nil
coupon |
89.06% |
28.07.2017 |
Convertible loan notes |
GBP |
Nil
coupon |
n/a |
No fixed
maturity |
16. Capital
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 2017
(30 April 2016: None).
17. Ultimate
Controlling party
As at the reporting date, the Directors
have not identified an ultimate controlling party.
18. Related party
transactions
Details of Directors remuneration are disclosed in Note 7
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 2017 the following
balances were included in trade payables and were outstanding in
respect of Directors remuneration or remuneration incurred prior to
their appointment as a Director at the year end.
|
Outstanding at 30
April
2017 |
Outstanding at 30
April 2016 |
|
$’000 |
$’000 |
David Whitby |
60 |
74 |
Paul Warwick |
60 |
24 |
Daniel Jorgensen |
180 |
82 |
Ross Warner (1) |
45 |
- |
Simon Gorringe (1) |
45 |
- |
Graham Smith (1) |
4 |
- |
Robert Arnott (1) |
37 |
- |
Total Key Management |
431 |
180 |
- Not a Director in the prior year
During the period to 30 April 2017
Paul Warwick, Robert Arnott and
Daniel Jorgensen did not receive any
cash remuneration in the period. The balances due to
Daniel Jorgensen, Paul Warwick, Robert
Arnott were accrued in accordance with their contracts
pending full or partial conversion into equity at a future
juncture.
The brought forward payable of $180,000 was in respect of remuneration earned
whilst Directors. On 13 May
2016, these brought forward payables were settled in full
alongside $228,000 of services that
were performed by the current Directors prior to their appointment
to the board. The total $408,000 was settled in full for shares issued at
0.2pence per share on completion of
the readmission to AIM dated 13 May
2016.
Prior year disclosure
On 5 June 2015, Andalas and
Corsair entered into an agreement ("Assignment") pursuant to which
Andalas agreed, amongst other things, to undertake and fund due
diligence in respect of certain oil and gas concessions in
Indonesia with a view to making an
investment. Initially, for administrative convenience,
Andalas and Corsair agreed to structure the funding of the due
diligence expenditures as loans ("Loans") to Corsair and,
accordingly, advances pursuant to that arrangement were made on 8
May (US$25,000), 10 June (US$250,000) and 15 July
2015 (US$225,000).
On 19 August 2015, Andalas
incorporated a subsidiary, Corvette Energy (Singapore) Pte Ltd ("Corvette"). On
26 January 2016, Andalas, Corsair and
Corvette entered into a novation agreement pursuant to which the
Loans were extinguished and the benefit of the loaned moneys was
transferred to Corvette with effect from 30
October 2015.
19. Events
after the reporting date
On 23 May 2017, the Company
announced a placing of 600,000,000 shares at a price of
0.1pence per share raising a total of
£600,000, of which the Directors subscribed for 168,000,000 shares
equating to £168,000.
On 31 July 2017, the Company
agreed to extend the term of the loan note for a period of 31 days
for a fee of £50,000 alongside the issue of 150,000,000 3 year
warrants at a strike price of 0.1pence per share, which was repaid in cash
alongside the £550,000 loan on 31 August
2017.
On 14 August 2017, the Company
announced that it had conditionally raised £1,050,000 for a total
of 1,615,384,615 shares at a price of 0.065pence per share; the first tranche
(£585,000) was issued on 17 August 2017.
On 31 August 2017 the company
issued the second tranche of 715,384,615 (£465,000) shares was
issued and the Company settled the outstanding loan note of
£600,000 as above. Furthermore following the passing of the
EMG resolutions the Company issued 161,538,462 5 year warrants to
third parties in connection with the 14
August 2017 placing.
The information contained within this
announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ('MAR’). Upon the publication of this
announcement via a Regulatory Information Service ('RIS'), this
inside information is now considered to be in the public
domain.
For further information, please contact:
David Whitby |
Andalas Energy and
Power Plc |
Tel: +62 21 2783 2316 |
Sarah Wharry
|
Cantor Fitzgerald
Europe
(Nominated Adviser and Joint Broker) |
Tel: +44 20 7894 7000 |
Jon Belliss |
Beaufort Securities
Limited
(Joint Broker) |
Tel: +44 20 7382 8415 |
|
|
|