TIDMAFR
RNS Number : 9217L
Afren PLC
30 April 2015
Afren plc (AFR LN)
Annual Financial Report
London 30 April 2015 Following the release of Afren plc's
("Afren" or the "Company") full year results for the year ended 31
December 2014 (the "Results"), the Company announces it has
published its Annual Report and Accounts for 2014 (the "Annual
Report and Accounts").
The Company's 2015 Annual General Meeting will be held at the
offices of White & Case LLP, 5 Old Broad Street, London, EC2N
1DW on Thursday 25 June 2015 at 11.00 am. Copies of the Annual
Report and Accounts are available to view on the Company's website
at www.afren.com.
In accordance with Disclosure and Transparency Rule 6.3.5(2)(b)
additional information is set out in the appendices to this
announcement. The Results included a set of condensed financial
statements and a fair review of the development and performance of
the business and the position of the Company and the Group.
Pursuant to Listing Rule 9.6.1, a copy of the Annual Report and
Accounts will shortly be available for inspection on the National
Storage Mechanism which can be accessed at
http://www.morningstar.co.uk/uk/NSM.
For further information contact:
Afren plc Tel: +44 20 7864 3700
Simon Hawkins, Group Head of Investor Relations
Bell Pottinger (public relations adviser to Afren plc) Tel: +44
20 7772 2500
Gavin Davis
Henry Lerwill
Appendix A: Directors' Responsibility Statement
The following Directors' Responsibility Statement is extracted
from page 104 of the Annual Report and Accounts.
Directors' Responsibility Statement
I confirm to the best of my knowledge:
1. The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole;
2. The strategic report, which is incorporated into the
Directors' Report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face; and
3. The annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
By order of the Board
Toby Hayward
Interim Chief Executive
30 April 2015
Appendix B: Principal Risks and Uncertainties
The following description of principal risks and uncertainties
is extracted from pages 26 to 29 of the Annual Report and
Accounts.
Principal Risks and Uncertainties
We have identified the following principal risks and
uncertainties in relation to the Group's financial and operational
performance in 2014.
Key risk Description and impact How we manage it
------------------------ -------------------------------------------- -------------------------------------
Operational risk
---------------------------------------------------------------------- -------------------------------------
Field delivery
risk Field delivery risk applies to all All operations are subject
phases of the E&P cycle from seismic to risk reviews, to identify
acquisition through to production as early as possible any
operations. At each phase the mitigating potential risks to success.
measures will be different. However,
failure to control risks will lead Our engineers analyse results
to project delays, cost over-runs, from appraisal and development
high production costs, early field wells, and determine the
decommissioning and, ultimately, appropriate course of action
lower than expected reserves. for the drilling programme
and facility design.
In 2014, Afren encountered operational
delays which impacted the timing We closely monitor all projects
of production ramp-up at both Ebok, to ensure they go to plan
with the installation of the Ebok and so we can take action
CFB extension facilities, and OML to maintain progress.
26, due to the declaration of Force
Majeure at the Forcados Terminal We monitor project finances
in Q1 2014. In January 2015, Afren alongside their budget to
announced its intention to review minimise over-runs.
its strategic options in respect
of the Barda Rash PSC, following We monitor production operations
disappointing operational performance closely to ensure we minimise
at the field and an updated reserves unplanned downtime and control
assessment from RPS Energy. operating costs tightly.
The maintenance of good working We compare actual production
relations with our Partners is also regularly to forecast production.
critical to field delivery. Without
this we face potential delays to We hold regular technical
projects, issues with funding and and operating meetings with
disagreement on how best to develop our Partners to keep them
our portfolio. fully appraised of developments
and to get their input and
agreement on key issues.
------------------------ -------------------------------------------- -------------------------------------
Exploration Exploration assets are subject
failure Exploration activities can be capital to a rigorous peer review
intensive and may involve a high process.
degree of risk. Sustained exploration
failure will affect the Group's growth We evaluate exploration
potential. risk for each prospect by
looking in detail at how
to de-risk the key elements
of the subsurface data,
source rock, reservoir,
trapping and seal mechanisms.
We subsequently rank prospects
and approve budgets.
------------------------ -------------------------------------------- -------------------------------------
Environmental
or safety There is a continuing focus on preventing We have implemented comprehensive
incidents major pollution or loss of life due EHSS management systems based
to failure of systems, equipment on best industry practice,
or human action. at both corporate and country
level, with an annual independent
audit programme to ensure
effective implementation.
Afren oversees its contractors
closely to ensure they accept
and meet our EHSS standards.
Specific EHSS teams in each
area of operation.
Contingency plans in place
and tested regularly.
------------------------ -------------------------------------------- -------------------------------------
Unfulfilled
work or PSC obligations Loss of production interest or exploration The operations, finance
licence due to incomplete fulfilment and legal teams jointly monitor
of work or PSC obligations. compliance with licence obligations.
We maintain good, open working
relationships with local
governments in the countries
of operation.
------------------------ -------------------------------------------- -------------------------------------
External risk
------------------------ -------------------------------------------- -------------------------------------
Geo-political The countries in which Afren operates Through close liaison in
risk continue to face political, socio--economic each relevant country, we
uncertainties. monitor the
situation from the perspective
2014 saw particular problems with of our safety and security.
Boko Haram in northern Nigeria and Contingency plans in place
the rise of Islamic State in Iraq. and tested regularly.
Whilst these issues received wide
international media coverage our operations Through our contacts in
were not directly affected and we governments and industry,
continue to monitor the situation as well as
closely. though specialist advisors,
we continuously monitor and
2015 will see elections in Nigeria evaluate
and we will be conducting a rigorous the potential impacts on
business risk assessment of the potential our business arising from
impacts that may arise. changes in the geo-political
environment.
------------------------ -------------------------------------------- -------------------------------------
Security Afren continues to operate in regions Security teams in each area
incidents where kidnapping, piracy and criminal of operation.
attacks occur. Rigorous security management
programme.
Security risk assessments
for each asset and operation.
------------------------ -------------------------------------------- -------------------------------------
Oil price Oil prices can fluctuate significantly.
volatility In Q4 2014, we liquidated
In 2014, the Group hedged approximately our hedge position, which
35% of production through the use benefited from the lower
of financial instruments. oil prices in the second
half of the year, to generate
cash.
------------------------ -------------------------------------------- -------------------------------------
Host
community Our operations both on and offshore Afren has a tried and tested
action have the potential for interruption system for managing community
by our host communities if relations affairs, which is applied
are not well established. to all operations.
Community affairs teams are
We have continued our close relationships in place where required.
with our host communities and have Contingency plans in place
seen no community action against our and tested regularly.
operations in 2014.
------------------------ -------------------------------------------- -------------------------------------
Strategic risk
------------------------ -------------------------------------------- -------------------------------------
Bribery and corruption As an international oil and gas operator, We conducted a comprehensive
bribery and corruption represent an anti-bribery and corruption
ongoing risk to our business. risk assessment during 2014.
This work was integrated
into the review and update
of the Code of Business Conduct
that was completed towards
the end of the year. The
new Code was approved by
the Board in December and
all staff and contractors
underwent on-line training
and testing on the requirements
of the Code.
We have established an independent
whistle-blowing hotline to
enable concerns about poor
practice to be voiced without
fear of reprisal.
We review and update specific
Anti-Bribery and Corruption
policies and procedures annually
and quarterly respectively,
to meet the stringent requirements
of the UK Bribery Act as
well as the UK Ministry of
Justice Guidance.
We provide new starters
and existing employees with
training on anti--bribery
and corruption as part of
the induction process and
as an ongoing programme.
We provide quarterly updates
to the Audit and Risk Committee
regarding anti-bribery and
corruption, including any
whistle-blowing reports and
their subsequent resolution.
------------------------ -------------------------------------------- -------------------------------------
Management Management of growth is a reducing All acquisitions are subject
of growth risk following the fall in oil price to thorough due diligence,
and the slowing of Company expansion. to create an effective integration
plan.
We design remuneration policies
to incentivise, motivate
and retain key employees
as well as to attract new
personnel as required.
------------------------ -------------------------------------------- -------------------------------------
Loss of key employees Loss of knowledge and skills to the We consider succession planning
Group, in particular in countries Group-wide, taking into account
of operation. the development of the executive
and senior management.
We design remuneration policies
to incentivise, motivate
and retain key employees
including Directors.
We set salaries and reward
of senior executives, including
Directors, at competitive
levels using third party
benchmarks.
------------------------ -------------------------------------------- -------------------------------------
Climate Greenhouse gas (GHG) emissions contribute We recognise the potential
change to climate change. Important stakeholders impact that energy use and
expect Afren to have a strategy and GHG have on climate change
meaningful reduction targets (flaring and to seek to reduce emissions
represents over 50% of Afren's current associated with flaring:
GHG emissions).
We monitor energy use and
Failure to address this issue risks ensure energy efficiency
reputational damage and issues with in all operations.
the Company's shareholders.
We monitor and report other
This also represents an opportunity atmospheric emissions.
for Afren to demonstrate a forward
looking approach in comparison to We have developed and disclosed
its peers. a comprehensive climate change
strategy and will identify
engineering solutions to
reduce flaring and set flaring
reduction targets for 2015.
------------------------ -------------------------------------------- -------------------------------------
Financial risk
------------------------ -------------------------------------------- -------------------------------------
Taxation There is a risk that changes in tax Our financial and legal teams
and other regimes and other legislation may monitor current legislation
legislation changes affect our financial results. As detailed and proposed changes and
in the financial statements, there incorporate these into our
are uncertainties surrounding the working practices.
taxation treatment of marginal fields
(see note 4.8: Contingent liabilities) Maintenance of good, open
and Pioneer status (see note 5.16: working relationships with
Post balance sheet events - Company local authorities in the
and Group) in Nigeria. countries of operation.
Involvement with industry
groups in the country of
operation to discuss sector
issues.
------------------------ -------------------------------------------- -------------------------------------
Treasury management The availability of financing to maintain The Group is currently in
the ongoing operations of the business the process of financial
is key. restructuring in order
to provide liquidity and
improved financial stability
for the Group's ongoing operations.
------------------------ -------------------------------------------- -------------------------------------
Appendix C: Related Party Transactions
Details of related party transactions for the year ended 31
December 2014 were disclosed in the results announcement issued on
30 April 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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