TIDMANGS
RNS Number : 5585R
Angus Energy PLC
09 March 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT
FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018 ("MAR"), AND IS DISCLOSED IN ACCORDANCE WITH
THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF MAR . IN ADDITION,
MARKET SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF THE
MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT
CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION AS
PERMITTED BY MAR. THAT INSIDE INFORMATION IS SET OUT IN THIS
ANNOUNCEMENT AND HAS BEEN DISCLOSED AS SOON AS POSSIBLE IN
ACCORDANCE WITH PARAGRAPH 7 OF ARTICLE 17 OF MAR. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THE INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL
THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION IN
RELATION TO THE COMPANY AND ITS SECURITIES
Angus Energy plc
("Angus Energy", "Angus" or the "Company")
Annual Report and Accounts and Notice of Annual General
Meeting
Angus Energy is pleased to announce its audited annual accounts
for the year ended 30 September 2020 (the "Accounts"), extracts of
which are set out below. In addition, the Company's 2021 annual
general meeting ("AGM") will be held on 31 March 2021 at 11.00 a.m.
The full copy of the Accounts along with the AGM Notice were posted
to all shareholders yesterday and are also available on the
Company's website, http://www.angusenergy.co.uk/
Format of General Meeting and attendance
As a result of the current COVID-19 crisis and the UK
Government's restrictions, and in accordance
with the provisions of the Corporate Insolvency and Governance
Act 2020 (as amended), the Company's AGM will be run as a closed
meeting, electronically. Shareholders are therefore not able to
attend the meeting in person and instead are strongly encouraged to
submit their proxy vote, appointing the Chairman of the meeting as
their proxy, to ensure that their votes are registered.
Shareholders should not appoint any other person as their proxy,
as that person will not be able to
attend the meeting in order to be able to cast the shareholder's
vote.
The business at the Company's AGM will be restricted to formal
business only. The format of the AGM will be simply to propose and
vote (on a poll, with votes cast by proxy) on the resolutions set
out in the notice. Although shareholders will not be able to attend
the AGM in person, shareholder participation is crucial.
Enquiries:
Angus Energy Plc www.angusenergy.co.uk
George Lucan Tel: +44 (0) 208 899 6380
Beaumont Cornish (Nomad) www.beaumontcornish.com
James Biddle/ Roland Cornish Tel: +44 (0) 207 628 3396
WH Ireland Limited (Broker)
Katy Mitchell/ Harry Ansell Tel: +44 (0) 113 394 6600
Flagstaff PR/IR angus@flagstaffcomms.com
Tim Thompson Tel: +44 (0) 207 129 1474
Fergus Mellon
Contents
Officers and Advisors 2
Chairman's Statement 4
Strategic Report 6
Corporate Governance Statement 17
Audit Committee Report 24
Directors' Remuneration Report 26
Board of Directors 28
Directors' Report 29
Statements of Directors' Responsibilities 32
Stakeholder Engagement 33
Independent Auditor's Report 37
Consolidated Statement of Comprehensive Income 43
Consolidated Statement of Financial Position 44
Consolidated Statement of Changes in Equity 45
Consolidated Statement of Cash Flows 46
Notes to the Consolidated Financial Statements 47
Company Statement of Financial Position 70
Company Statement of Changes in Equity 71
Notes to the Company Financial Statements 72
Officers and Advisors
Directors
George Lucan (Managing Director)
Patrick Clanwilliam (Non-Executive Chairman)
Cameron Buchanan (Non-Executive Director)
Carlos Fernandes (Finance Director)
Andrew Hollis (Technical Director)
Secretary
Carlos Fernandes
Registered Office
Building 3, 566 Chiswick Park
Chiswick High Road
London
W4 5YA
Nominated Advisor
Building 3, 566 Chiswick Park
Chiswick High Road
London
W4 5YA
Brokers
WH Ireland Group plc
24 Martin Lane
London
EC4R 0DR
Auditor
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Solicitor
Fladgate LLP
16 Great Queen Street
London
WC2B 5DG
Principal Bankers
Metro Bank Plc
One Southampton Row
London
WC1B 5HA
HSBC Holdings Plc
PO Box 10
59 Old Christchurch Road
Bournemouth
Dorset
BH1 1EH
Registrars
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
Chairman's statement
Dear Fellow Shareholders,
It is my pleasure to present you with the Annual Report of Angus
Energy plc (the "Company" or "Angus Energy") with its subsidiary
undertakings (the "Group") for the year ended 30 September
2020.
An unusual year for everyone and a particularly challenging one
for the hydrocarbon sector. Crude oil and even gas prices plunged
to historic lows during the first Spring 2020 lockdown. Whilst
frustrating to see such slow progress on regulatory and planning
approvals at Balcombe and Brockham, it was perhaps fortuitous that
we were not producing and selling either oil or gas at what might
have been an economic loss for much of the period to September
2020.
Prices stabilized in the latter part of the reporting period
with gas prices, at the time of going to press, comfortably ahead
of our long-range assumptions in the Saltfleetby Competent Persons
Report. Additionally, we do foresee a period of relatively tight
supply in all hydrocarbons two to three years hence which should
provide good support for oil prices, although in the longer term,
beyond five years, our general view is that gas as a commodity will
hold value much better than oil.
Whilst our long-term picture does not favor oil prices, we do
intend to push ahead with production from our Southern fields in
order to exploit the potential for more robust crude pricing in the
medium term. So, we are pressing ahead with our application for
water injection for reservoir support at Brockham and a renewed
focus in improved production from Lidsey.
Within the 2021 calendar year we anticipate that the Saltfleetby
Gas Field will be our core cash producing asset for the foreseeable
future and I am pleased to say that we were able, during this
accounting period, to complete a Competent Persons Report
confirming our original view of the Field as being worth multiples
of Angus' market capitalization at the period end and justifying
the management time and financial resources deployed to develop the
Field. Additionally, we obtained local authority planning
permission and began the task of connecting the old pipeline to the
national grid, which is a project considerably advanced at the time
that I am reporting to you now.
There have been delays and cost overruns in the procurement
process for the process facilities. Such delays are not unusual in
significant projects of this nature and it should be said that the
procurement environment for gas processing has become more
challenging, as is described and explained in more detail in the
Operations Report below. Nonetheless, after a year's search for
finance to develop the Field we are now approaching a position
where shareholders are able to see a clear runway to cash
generative production.
Finally, in last year's report, my Managing Director, mentioned
an intention to pursue projects supportive of our country's
commitment to energy transition from carbon burning. I am pleased
to report some activities and much to come.
Financial and Statutory Information
Revenue from oil and gas production during the year was down to
GBP0.068m (2019: GBP0.2m) on production of a gross 1,594 barrels
(2019: 5,346 barrels). This was the result of the Lidsey Oil Field
being shut in due to problems with the downhole pump during the
year coupled with low oil prices.
The Group recorded a loss of GBP2.516m (2019: GBP5.043m). During
these difficult economic times, the company has made a conscious
effort to cut costs at both corporate and operational levels while
still maintaining high level of professionalism and operatorship.
This has paid off seeing administrative costs being reduced by
GBP1.916m to GBP2.060m (2019:
GBP3.976m).
Outlook
Whilst the company maintains its focus on getting Saltfleetby
into production this year we are also planning for the extended
well test at Balcombe and look forward to resuming production at
Brockham and Lidsey.
As previously mentioned, we are constantly reviewing projects to
complement our existing portfolio and create shareholder value. We
have widened our net to include alternative energy and
infrastructure projects and continue our study into the Geothermal
project we have identified. We believe the company is well
positioned to take advantage of opportunities as they present
themselves.
Patrick Clanwilliam
Chairman
08 March 2021
Operating Review
In March 2020 we published the results of the Competent Persons
Report completed by Oilfield International, an independent energy
consultancy. The positive results of the report along with a Gas
Sales Agreement entered with Shell Energy Europe Limited, a
division of Royal Dutch Shell plc, reaffirming management's
decision to acquire an interest in the Saltfleetby Field.
The full report is available on the Company website under
Presentations at the following link
http://www.angusenergy.co.uk/media/presentations/. The below tables
reflect the gross and net reserves, resources or present value
attributable to Angus's shareholding of 51%.
Focusing on the mean sales gas reserves, approximately equal to
the 2P case, these are estimated by Oilfield International at 16
billion cubic feet (BCF). Also forming part of mean reserves are
97,000 barrels of condensate. The total cash flow after costs but
before taxes of these reserves is approximately GBP50 million at
prices derived from the gas forward curve from ICE exchange and an
average forward condensate price of $42/bbl. The report reports the
net present value of the above reserves, but not the contingent
resources, which it defines as the gas and condensate sales revenue
minus the grid connection costs, capital expenditure, operating
expenditure, taxation and abandonment cost, and adjusted for the
time value of money. The resulting mean value of the reserves to
Angus shareholders, which is also the central case, is just over
GBP25 million, with a high case of GBP35 million and a low case of
GBP16.7 million.
Away from Saltfleetby, a further potential large scale
geothermal project is under study. The proposed scheme, located in
an area of high geothermal gradient, would be designed to achieve
significant commercial power generation. Current projects in the
area have de-risked some aspects of this technology and this
project would seek to build on that experience to scale up to a
full power generation project.
Current work is evaluating possible locations including
preliminary discussions with landowners coupled with technical work
on well design, surface facilities and infrastructure including
initial contacts with the electricity grid connection provider. At
the same time, the regulatory and planning framework is being
reviewed and initial submissions are in preparation. Deeper
geothermal energy will become increasingly important as a stable
provider of electricity balancing the output from other green
energy sources that are subject to the vagaries of wind and
weather. Angus sees a large new market opening for these projects
and wishes to be an early entrant to the field.
Under the heading "Review of activities" below we provide a more
in-depth summary of operational activities. I again repeat my
statement of last year that our first concern as a Group must be
for the safety of our staff, contractors, the public at large and
the environment on which we rely on. It is with pleasure that I
report that all operations were performed
without any safety incidents or environmental damage. We will
continue to work in close co- operation with all of our regulators,
ensuring a spotless record of compliance - the Oil and Gas
Authority ("OGA"), the Environment Agency ("EA") the Health and
Safety Executive ("HSE") and our local councils.
Business Review
The principal activity of the Group during the year continued to
be onshore, conventional production and development of hydrocarbons
in the UK.
Review of activities
Saltfleetby
In December 2019, the Oil and Gas Authority gave its consent to
the assignment of a 51% share in Saltfleetby Energy Limited's
interest in the Saltfleetby Field blocks of PEDL005 to Angus Energy
Weald Basin No 3 Limited, a wholly owned subsidiary of the Company.
The Authority also gave consent to the appointment of Angus Energy
Weald Basin No3 Limited as Exploration and Production Operator. The
Company followed by submitting a Field Development Plan to the Oil
& Gas Authority while completing the Conceptual design of the
reconnection point at the National Grid Entry point at
Theddlethorpe and design of on-site processing facilities. This
allowed the Company to start the equipment identification and
procurement and open discussions with planning officers at
Lincolnshire County Council.
Applications to Lincolnshire County Council relating to updating
current use of the site to incorporate on-site gas processing and
the 750-meter extension of the pipeline to the National Grid
Terminal were approved. Applications for the variation of permit at
the Environment Agency has also been submitted and for sundry
permissions and approvals at Health & Safety Executive.
In Q1 of 2020 the company carried out the final stages of
abandonment on wells SF1 & SF3 to full ABIII abandonment. This
has left 6 remaining wells on the field, with 2 earmarked for
future production and the remaining 4 under review as sidetrack
candidates or for alternative uses such as heat capture and
geothermal. An initial pilot study was commissioned by the company
to assess the use of these remaining wells with respect to a
geothermal/heat capture project. Initial findings appear positive,
and the company is now assessing a way forward on this.
The main operational activities at Saltfleetby consisted of the
commencement of the construction of the pipeline extension from the
existing 10" line to the National Grid entry point. By the end of
2020, the 4" section had been completed, with only a short stretch
of c.150m of 10" steel to be installed in Q1 2021. Once complete a
period of testing and commissioning will begin.
Detailed design of the processing facilities that will be
installed on the site itself is well underway, and down payments
have been m on many of the key bits of equipment. It is
the companies view that equipment will begin to arrive on site
during 2021 and installation and commissioning will commence with
the expectation of first gas in H2 2021.
Balcombe
Following the initial 7 day well test in the Autumn of 2018, a
planning application was submitted in late 2019 for a longer 3 year
well test on the Balcombe 2Z well. The aim of the planned operation
is to recover remaining drilling fluids to prepare the well for an
extended well test. A long term extended well test will indicate to
what degree the well and field can produce hydrocarbons at a
commercial rate.
However, in early 2020 the planning officer recommended the
application for refusal and the company withdrew the application
before committee stage. A revised application for a 12 month
extended well test was then submitted to WSCC, including a wealth
of information on socio economic benefits and the projects'
alignment with the public interest case for oil in terms energy
security and benefit to the national economy from indigenous
production.
The Planning Officer recommended the application for approval
but despite this the Planning Committee Meeting held remotely on
Tuesday 2 March 2021 at 10.30 am decided against the application.
The Company is of the view that this decision was not in accordance
with the Council's own policies and will consult with legal
advisors on appeal routes once the Decision is issued in
writing.
Lidsey
The Lidsey oilfield continued to provide steady production from
well Lidsey X2 during the first 2-3 months of the year, before the
well was shut in due to falling brent crude prices as result of the
Covid-19 pandemic. Mechanical problems with the downhole pump and
nipple assembly resulted in a difficult restart to production in
the summer. Several small workover attempts were made to ensure the
pump was correctly seated and several joints of the rod string were
replaced due to wear and tear. Following this production resumed,
albeit at slightly reduced rates. The focus of the field is now on
enhancing production rates with optimized pumping routines and
ensuring maximal hydrocarbon recovery from the reservoir.
In addition, initial re-mapping of the field has indicated
potential sidetrack opportunities from the existing wellbores,
which could be confirmed by the acquisition of further seismic data
as previously advised by the company. This work is being considered
with partners.
Brockham
The Group continued with its plan to obtain commercial value
from the licence by resuming production from the Portland
reservoir. An application to the Environment Agency for permission
to re-inject formation water to maintain pressure in that reservoir
to gain maximum hydrocarbon recovery was submitted. This included
an updated Hydrogeological Risk Assessment report as per our recent
submission regarding Balcombe. A Field Development Plan was also
submitted to this effect to the Oil & Gas Authority which was
approved. The Group believes that, subject to permits being
granted, the site would be commercially profitable without any
further significant capital expenditure. Recompletion of the BR X4Z
well as a Portland producer is also under consideration.
A24 Prospect, formerly Holmwood
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence
(Holmwood/A24 Prospect) in which Angus had an interest of 12.5%,
announced that "a detailed study examining the viability of
drilling the A24 (formerly Holmwood) Portland prospect's centre
from selected sites outside the Surrey Hills Area of Outstanding
Natural Beauty, each over 3 km from the target, concludes that the
required long-reach/shallow target-depth wells are neither
technically viable or economically feasible. Consequently, UKOG and
its partners have now relinquished their interests in the licence.
It remains a great disappointment to the Company that the licence's
former operator, Europa Oil and Gas, whilst in possession of
planning consent, failed to drill the prospect from the Holmwood
site, around 1 km from the target." This was a decision supported
by the Company.
Strategy and Sustainability
The Directors' objective remains unchanged, to create long term
value for shareholders by building the Group into a profitable
energy production company with a reputation for technical
excellence but with great cost discipline. The Director's will
continue to focus on the UK onshore but do not rule out
acquisitions overseas in jurisdictions where the rule of law is
strong. We understand the energy requirements and infrastructure
constraints, combined with a development plan based on
fundamentals, can lead to sustainable and profitable opportunities
for investors. As such we are constantly reviewing potential
projects that will complement our existing core skills and
portfolio of assets.
From the point of view of sustainability, the Directors are
aligned with the national energy objectives and look forward with
enthusiasm to the opportunities ahead in the common goal of net
zero. Whilst we will continue to win a return from legacy oil
fields, the preference remains for the acquisition of gas assets,
but the company has widened the net to included sustainable energy
projects. One such example is our Deep Geothermal Project, which
provides the baseload generation which wind and solar cannot do
without and contains many innovative, risk reducing elements for
partners and investors alike.
Global Environment and Stewardship
As a Group we do have duties of stewardship to the wider
environment of which we are acutely aware. At Angus we realise
there needs to be significant improvement in the Energy Mix and the
transition begins with the proper operation of the existing energy
assets and the responsible development of new ones. We understand
hydrocarbons are still needed but must be produced to the highest
ESG standards.
When it comes to our existing operations or evaluating potential
new projects we are always focused on creating the least possible
impact to the environmental.
Local Environment
As a responsible OGA approved and Environment Agency ("EA")
permitted UK operator, Angus Energy is committed to utilising
industry best practices and achieving the highest standards of
environmental management and safety. Our operations:
-- Continuously assess and monitor environmental impact
-- Promote internally and across our industry best practices for
environmental management and safety
-- Constant attention to maintaining our exemplary track record of safe oil and gas production
There were no reportable health and safety incident during the
year.
Community
Angus Energy seeks and maintains positive relationships with its
local communities. We achieve this through our various forms of
communication which include community liaison meetings, social
media updates, RNS's and Investor Q & A sessions.
In general, we are guided by the following principles:
-- Open and honest dialogue
-- Engagement with stakeholders at all stages of development
-- Proactively address local concerns
-- Actively minimise impact on our neighbours
-- Adherence to a strict health and safety code of conduct
On 4 June 2018, the Group established the Bruce Watt Memorial
Scholarship, a yearly scholarship fund of GBP10,000 per year to
support students from Bognor Regis and the surrounding community to
undertake further academic studies beyond secondary school.
Currently there have been 7 recipients of the Scholarship
award.
Financial Review
The Group began the period with the following interests: 65% of
Brockham (PL235), 80% of Lidsey (PL241), 25% of Balcombe, 12.5% of
the A24 Prospect (PEDL 143) and 51% of Saltfleetby Gas Field
(PEDL005).
The Group had a cash balance of GBP3.419m as at 30 September
2019.
On 25 October 2019, the Company entered into a GBP1.5 million
Convertible Loan Note facility led by Riverfort Global
Opportunities PCC Limited of which GBP1m was drawn down
immediately.
On 12 December 2019, the company issued 13,766,520 shares at
0.7264p each. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note
described in note 21.
On 18 February 2020, the company issued 17,319,016 shares at
0.5774p each. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note
described in note 21.
On 15 March 2020, the company issued 32,133,676 shares at a
price 0.6224p. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note
described in note 21.
During the period, a further GBP542,000 of the Convertible Loan
Note was repaid in cash leaving a balance of GBP58,000 at the end
of the period which was subsequently converted in ordinary shares
as detailed in note 24.
On 20 April 2020, the Company issued a 4% per annum GBP1,400,000
Convertible Loan Note (the "New Loan Note") to Knowe Properties
Limited, a significant shareholder in the Company. The New Loan
Note is unsecured and is convertible at maturity after two years at
the lower of (a) GBP0.01; or (b) if there is an issue of Shares or
options in respect of Shares (excluding options granted to
directors, managers or employees) by way of a single or directly
related offer to the public with an aggregate subscription amount
of GBP250,000 or more made without the prior written approval of
the Noteholder then the price attaching to the lowest of those
issues.
Alternatively, and at the Company's option, the Loan Note is
repayable in part or whole at any time up to two months before
maturity with an accompanying grant of warrants equal to the face
value of the amount repaid. The warrants are exercisable at the
lower of 1.3 pence or a 30% premium to the Conversion Price.
Additionally, the Company has undertaken not to issue options to
directors or staff at an exercise price below GBP0.01 during the
term of the New Loan Note.
On 29 September 2020, the company issued 111,111,105 shares at
0.9p per share, raising gross proceed of GBP1,000,000.
At the end of the financial year the Group had Convertible loan
notes outstanding totaling
GBP1.483m (2019: GBPnil).
As at 30 September 2020, the Group retained a 51% interest in
the Saltfleetby field, 65% in Brockham field, 80% interest in
Lidsey field, 25% in the Balcombe field where the Group is the
operator of all 4 fields.
The Group had cash balance of GBP1.852m at the end of reporting
year.
On 21 October 2020, the Group announced the acquisition of
Doriemus Plc's 10% interest in Brockham License PL235, as a result
the Group will have an interest in the License of 75% once the
transaction concludes.
The Group generated GBP0.068m revenue from oil and gas
production during the year (2019:
GBP0.200m). This was the result of the sale of 1,594 bbls of
oil.
The Group recorded a loss of GBP2.516m (2019 a loss of
GBP5.043m). For the year under review, the administrative costs
were reduced by GBP1.219m to GBP2.060m (2019: GBP3.976m).
The Group's overall financial objectives are to increase
revenue, return to profitability and enhance the asset base
supporting the business. In order to monitor its progress towards
achieving these objectives, the Group has set a number of key
performance indicators, which deal predominately with revenue,
profitability, margin and cash flow as above.
Governance, Compliance and Shareholder Relations
The Board consists of a Managing, Finance and Technical Director
supervised by two experience non-executive Directors. The Board
which meets regularly alongside with Aim Rules Committee meeting,
Remuneration Committee and Audit Committee meetings.
In general, the management structure is very flat. In total we
have 11 employees, including management. The Company relies heavily
on third party experienced contractors.
We have appointed two compliance officers to deal with all our
regulators and planning authorities which are presently Surrey,
Lincolnshire and West Sussex County Council, the Oil & Gas
Authority, the Environment Agency and the Health & Safety
Executive. Additionally, as a publicly listed company, we are
answerable to the AIM Market Division and to the Financial Conduct
Authority.
Compliance is an area which has grown more complicated and
expensive in recent years and we expect it to get more so.
Regulators are being more pro-active and pre-emptive, and we must
anticipate their needs and expectations better than we have in the
past. We should aim to maintain better dialogue with all regulators
and planners and engage in more frequent use of pre-approval
procedures where they are available.
Principal risks and uncertainties
Currency risks
The Group sells its produced crude oil; oil is priced in US
dollars whilst the bulk of its costs are in GBP and therefore the
Group's financial position and performance will be affected by
fluctuations in the US dollar, sterling exchange rate along with
fluctuations in the oil price. Accordingly, the value of such
transactions may be adversely affected by changes in currency
exchange rates, which may have a material adverse effect on the
business, financial condition, results of operations and prospects
of the Group.
Market risk
The demand for, and price of, oil and gas are highly dependent
on a variety of factors beyond the Group's control. The continued
marketing of the Group's oil will be dependent on market
fluctuations and the availability of processing and refining
facilities and transportation infrastructure, including access to
roads, train lines and any other relevant options at economic
tariff rates over which the Group may have limited or no control.
Transport links (including roads and pipelines) may be inadequately
maintained and subject to capacity constraints and economic tariff
rates may be increased with little or no notice and without taking
into account producer concerns. Producers of oil negotiate sales
contracts directly with oil purchasers, with the result that the
market determines the price of oil. The price depends in part on
oil quality, prices of competing fuels, distance to market, the
value of refined products and the supply/demand balance. The
marketability and prices of oil that may be discovered or acquired
by the Group will be affected by numerous factors beyond its
control.
Permitting risk
The Group exposed to the planning, environmental, licensing and
other permitting risks associated with its operations particularly
with exploration drilling operations.
The Group has to date been successful in obtaining the required
permits to operate. Therefore, the Group considers that such risks
are mitigated through compliance with regulations, proactive
engagement with regulators, communities and the expertise and
experience of the management team.
Reserve and resource estimates
No assurance can be given that hydrocarbon reserves and
resources reported by the Group in the future are present as
estimated, will be recovered at the rates estimated or that they
can be brought into profitable production. Hydrocarbon reserve and
resource estimates may require revisions and/or changes (either up
or down) based on actual production experience and in light of the
prevailing market price of oil and gas. A decline in the market
price for oil and gas could render reserves uneconomic to recover
and may ultimately result in a reclassification of reserves as
resources. Unless stated otherwise, the hydrocarbon reserve and
resources data contained in the financial statements are taken from
the Competent Person's Report, at the time of AIM admission on 14
November 2016.
There are uncertainties inherent in estimating the quantity of
reserves and resources and in projecting future rates of
production, including factors beyond the Group's control.
Estimating the amount of hydrocarbon reserves and resources is an
interpretive process and, in addition, results of drilling, testing
and production subsequent to the date of an estimate may result in
material revisions to original estimates.
The hydrocarbon resources data extracted from the Competent
Person's Report are estimates only and should not be construed as
representing exact quantities. The nature of reserve quantification
studies means that there can be no guarantee that estimates of
quantities and quality of the resources disclosed will be available
for extraction. Therefore, actual production, revenues, cash flows,
royalties and development and operating expenditures may vary from
these estimates. Such variances may be material. Reserves estimates
are based on production data, prices, costs, ownership,
geophysical, geological and engineering data, and other information
assembled by the Group (which it may not necessarily have
produced).
The estimates may prove to be incorrect and potential investors
should not place reliance on the forward-looking statements
(including data included in the Competent Person's Report or taken
from the Competent Person's Report and whether expressed to have
been certified by the Competent Person or otherwise) concerning the
Group's reserves and resources or production levels. Hydrocarbon
reserves and resources estimates are expressions of judgment based
on knowledge, experience and industry practice. They are therefore
imprecise and depend to some extent on interpretations, which may
prove to be inaccurate. Estimates that were reasonable when made
may change significantly when new information from additional
analysis and drilling becomes available.
This may result in alterations to development and production
plans which may, in turn, adversely affect operations. If the
assumptions upon which the estimates of the Group's hydrocarbon
resources have been based prove to be incorrect, the Group (or the
operator of an asset in which the Group has an interest) may be
unable to recover and produce the estimated levels or quality of
hydrocarbons set out in this document and the Group's business,
prospects, financial condition or results of operations could be
materially and adversely affected.
Events after the reporting period
The Group had a cash balance of GBP1.852m as at 30 September
2020 subsequent to the significant cash movements described during
the reporting period.
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence
(Holmwood/A24 Prospect) in which Angus had an interest of 12.5%,
announced that "a detailed study examining the viability of
drilling the A24 (formerly Holmwood) Portland prospect's centre
from selected sites outside the Surrey Hills Area of Outstanding
Natural Beauty, each over 3 km from the target, concludes that the
required long-reach/shallow target-depth wells are neither
technically viable or economically feasible. Consequently, UKOG and
its partners have now relinquished their interests in the licence.
It remains a great disappointment to the Company that the licence's
former operator, Europa Oil and Gas, whilst in possession of
planning consent, failed to drill the prospect from the Holmwood
site, around 1 km from the target." This was a decision supported
by the Company.
On 21 October 2020, the Company executed a Sale & Purchase
Agreement for the purchase of Doriemus plc's ("Doriemus") 10%
interest in the Brockham PL235 Licence, thereby increasing the
Company's interest from 65% to 75%. The purchase price for the
Licence is adjusted for the settlement of outstanding amounts due
from Doriemus to the Company and a contribution towards the
estimated share of long-term abandonment liabilities and results in
a net payment to the Company of approximately GBP260,000 in cash in
Completion.
On 4 November 2020, the Company announced that, in relation to
the GBP1.5 million convertible loan facility announced on 25
October 2019 (the "Loan") and amended on 20 April 2020, it received
a notice from Riverfort Global Opportunities PCC Limited and YA II
PN Ltd ("Investors") to convert the final GBP58,335 of the Loan
into Angus shares. After the conversion there were no outstanding
liabilities between the Company and the Noteholders. The Company
had therefore allotted 9,678,945 new ordinary shares to the
noteholders.
On 30 November 2020, the Company together with its partner,
Saltfleetby Energy Limited ("SEL"), it had entered into a
Memorandum of Understanding (the "MOU") with Aleph Energy Limited
and Aleph Commodities Limited ("Aleph") detailing non-binding Heads
of Terms to provide up to GBP12 million towards the Saltfleetby
Finance Facility required to develop the Saltfleetby Gas Field
("Saltfleeby"). The indicative terms provide for a four year
amortising loan facility of up to GBP12million with a 12% margin
over LIBOR, a 3% commitment fee payable out of the facility, a
share grant of 30 million shares in Angus, issued over the life of
the facility and an override of 8% on gross revenue following
repayment of the facility. Given the share grant to be issued by
Angus under the MOU, SEL has agreed net drawdowns from the facility
to cover elements of the pipeline completion, thereby keeping the
relative funding liabilities on the agreed pro rata basis of
51%/49%.
On 16 December 2020, the company raised gross proceeds of
GBP249,990 as result of a placing of new ordinary shares. A total
of 41,664,999 new ordinary shares in the capital of the Company
have been placed by WH Ireland Limited with new and existing
investors at a price of 0.6 pence per share.
On 27 January 2021, the company raised gross proceeds of
GBP1,5000,000 as result of a placing of new ordinary shares. A
total of 150,000,000 new ordinary shares in the capital of the
Company have been placed by WH Ireland Limited with new and
existing investors at a price of 1 pence per share. The Placing
Shares were also accompanied by the issue of one warrant to
subscribe for one ordinary share in the Company for each Placing
Share (the "Placing Warrant"). The Placing Warrants are exercisable
at any time, for a period of 2 years, from the date of Admission at
the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at
1.5p.
On 1 February 2021, to satisfy additional demand, the company
conditionally placed a further 15,000,000 new ordinary shares in
the Company at a price of 1 pence per share to raise gross proceeds
of GBP150,000. The Further Placing Shares were also accompanied by
the issue of one warrant to subscribe for one ordinary share in the
Company for each Further Placing Share (the "Further Placing
Warrants"). When issued, the Further Placing Warrants will be
exercisable at any time, for a period of 2 years, from the date of
admission of the Further Placing Shares at the following exercise
prices: 50% at 1.2p; 25% at 1.35p and 25% at 1.5p.
Outlook
The company looks forward to completing the pipeline
reconnection works at Saltfleetby and seeing first gas delivered to
National Grid. This milestone will be complemented by production at
our Southern Fields and the exciting prospect of a near term
Geothermal project.
Approved by the Board of Directors and signed on behalf of the
Board.
George Lucan
Managing Director
08 March 2021
Details of all our assets and operations can be found at
www.angusenergy.co.uk
Corporate Governance Statement
The Directors recognise that good corporate governance is a key
foundation for the long term success of the Group. The Company is
listed on the AIM market of the London Stock Exchange and is
subject to the continuing requirements of the AIM Rules. The Board
has therefore adopted the principles set out in the Corporate
Governance Code for small and mid-sized companies published by the
Quoted Companies Alliance ("QCA Code"). The principles are listed
below with an explanation of how the Company applies each
principle, and the reasons for any aspect of non-compliance.
1. Establish a strategy and business model which promote long-
term value for shareholders
Angus Energy Plc provides shareholders with a full discussion of
corporate strategy within our Annual Report. A dedicated section
explains how we will establish long term shareholder value, as set
out on page 10.
The Company is focused around 3 key strategic goals:
-- increase production and recovery from its existing asset portfolio;
-- grow the asset portfolio through select onshore development and appraisal projects;
-- actively manage costs and risks through operational and
management control of the entire process of exploring, appraising
and developing its assets.
The Management team actively evaluates projects that
simultaneously de-risk the current portfolio and create long term
shareholder value. Projects are evaluated based on many
characteristics to mitigate risk to our current activities they
include but are not limited to alignment with the Company's core
competencies, geography, time horizon and value creation. Further,
a core component of the Company's activities include an active
dialogue with our legal and legislative advisors to ensure the
Company remains up to date on current legislation, policy and
compliance issues.
The key challenges to the business and how they may be mitigated
are detailed in the Strategic Report on pages 6 to 16.
2. Seek to understand and meet shareholder needs and
expectations
Angus Energy encourages two-way communication with institutional
and private investors. The Group's major shareholders maintain an
active dialogue to and ensure that their views are communicated
fully to the Board. Where voting decisions are not in line with the
company's expectations the Board will engage with those
shareholders to understand and address any issues. The Company
Secretary is the main point of contact for such matters.
The Company seeks out appropriate platforms to communicate to a
broad audience its current activities, strategic goals and broad
view of the sector and other related issues. This includes but is
not limited to media interviews, website videos in -person investor
presentations and written content.
Communication to all stakeholders is the direct responsibility
of the Senior Management team. Managers work directly with
professionals to ensure all inquiries (through established channels
for this specific purpose such as email or phone) are addressed in
a timely matter. And that the Company communicates with clarity on
its proprietary internet platforms. Senior management routinely
provides interviews to local media, and business reporters in
support of the company's activities. The Board routinely reviews
the Company communication policy and programmes to ensure the
quality communication with all stakeholders.
3. Take into account wider stakeholder and social
responsibilities and their implications
for long term success
In all endeavours, the Company gives due consideration to the
impact on its neighbours. The Company seeks out methodologies,
processes and expertise in order to address the concerns of the
non-investment community. As such, it actively identifies the
bespoke needs of local communities and their respective
planners.
For example, the company provides for local hotlines and
establishes community liaison groups to address local questions and
concerns.
Angus Energy seeks to maintain positive relationships within the
communities we operate. As such, Angus Energy is dedicated to
ensuring:
-- Open and honest dialogue;
-- Engagement with stakeholders at all stages of development;
-- Proactively address local concerns;
-- Actively minimise impact on our neighbours; and
-- Adherence to a strict health and safety code of conduct
As a responsible OGA approved and EA permitted UK operator,
Angus Energy is committed to utilising industry best practices and
achieving the highest standards of environmental management and
safety.
Our operations:
-- Continuously assess and monitor environmental impact;
-- Promote internally and across our industry best practices for
environmental management and safety; and
-- Constant attention to maintaining our exemplary track record of safe oil and gas production.
The Company has also established a scholarship programme for
community residents seeking secondary or further education.
For more information please refer to the page 11 of the Annual
Report as well as the Community section within the Company's
corporate website.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organization
Risk Management in the Strategic Report details risks to the
business, how these are mitigated and the change in the identified
risk over the last reporting period.
The Board considers risk to the business at every Board meeting
(at least 8 meetings are held each year) and the risk register is
updated at each meeting. The Company formally reviews and documents
the principal risks to the business at least annually.
Both the Board and senior managers are responsible for reviewing
and evaluating risk and the Executive Directors meet at least
monthly to review ongoing trading performance, discuss budgets and
forecasts and new risks associated with ongoing trading.
5. Maintain the Board as a well- functioning, balanced team led
by the chair
Oversight of Angus Energy is performed by the Company's Board of
Directors. Patrick Clanwilliam, the acting Non-Executive Chairman,
is responsible for the running of the Board and George Lucan, the
Managing Director, has executive responsibility for running the
Group's business and implementing Group strategy. All Directors
receive regular and timely information regarding the Group's
operational and financial performance. Relevant information is
circulated to the Directors in advance of meetings. In addition,
minutes of the
meetings of the Directors of the main UK subsidiary are
circulated to the Group Board of Directors. All Directors have
direct access to the advice and services of the Company Secretary
and are able to take independent professional advice in the
furtherance of the duties, if necessary, at the company's
expense.
The Board comprises of three Executive Directors and two
Non-Executive Directors with a mix of significant industry and
business experience within public companies. The Board considers
that all Non- executive Directors bring an independent judgement to
bear. All Directors must commit the required time and attention to
thoroughly fulfil their duties.
The Board has a formal schedule of matters reserved to it and is
supported by the Audit, Remuneration, Nomination and AIM Rules
compliance committee. The Schedule of Matters Reserved and
Committee Terms of Reference are available on the Company's website
and can be accessed on the Corporate Governance page of the
website.
6. Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
The nomination committee will determine the composition of the
Board of the Group and appointment of senior employees. It will
develop succession plans as necessary and report to the Directors.
Where new Board appointments are considered the search for
candidates is conducted, and appointments are made, on merit,
against objective criteria and with due regard for the benefits of
diversity on the Board, including gender.
The Company Secretary supports the Chairman in addressing the
training and development needs of Directors.
As a small company, all members of the Board share
responsibility for all Board functions. As such the Board will from
time to time engage outside consultants to provide an independent
assessment.
7. Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
The Board carries out an evaluation of its performance annually,
taking into account the Financial Reporting Council's Guidance on
Board Effectiveness. All Directors undergo a performance evaluation
before being proposed for re- election to ensure that their
performance is and continues to be effective, that where
appropriate they maintain their independence and that they are
demonstrating continued commitment to the role.
Details of the Board performance effectiveness process will be
included in the Directors' Remuneration Report on page 27.
8. Promote a corporate culture that is based on ethical values
and behaviours
The Group is committed to maintaining and promoting high
standards of business integrity. Company values, which incorporate
the principles of corporate social responsibilities (CSR) and
sustainability, guide the Group's relationships with clients,
employees and the communities and environment in which we operate.
The Group's approach to sustainability addresses both our
environmental and social impacts, supporting the Group's vision to
remain an employer of choice, while meeting client demands for
socially responsible partners.
Company policy strictly adheres to local laws and customs while
complying with international laws and regulations. These policies
have been integral in the way group companies have done business in
the past and will continue to play a central role in influencing
the Group's practice in the future.
The ethical values of Angus Energy including environmental,
social and community and relationships, are set out on pages 10 and
11 and 33 to 36 of the Annual Report.
9. Maintain governance structures and processes that are fit for
purpose and support good decision- making by the Board
The Company has adopted a model code for directors' dealings and
persons discharging managerial responsibilities appropriate for an
AIM company, considering the requirements of the Market Abuse
Regulations ("MAR"), and take reasonable steps to ensure compliance
is also applicable to the Group's employees (AIM Rule 21 in
relation to directors' dealings).
The Corporate Governance Statement details the company's
governance structures, the role and responsibilities of each
director. Details and members of the Audit Committee, Remuneration
Committee, Nomination Committee and AIM Rules compliance committee
can be found on pages 22.
10. Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders.
The Company encourages two- way communication with both its
institutional and private investors and responds quickly to all
queries received. The Managing Director talks regularly with the
Group's major shareholders and ensures that their views are
communicated fully to the Board.
The Board recognises the AGM as an important opportunity to meet
private shareholders. The Directors are available to listen to the
views of shareholders informally immediately following the AGM.
To the extent that voting decisions are not in line with
expectations, the Board will engage with shareholders to understand
and address any issues.
In addition to the investor relations activities carried out by
the Company as set out above, and other relevant disclosures
included on this Investor Relations section of the Company's
website, reports on the activities of each of the Committees during
the year will be set out in the Annual Report on page 22.
The Board and its committees
The Board of the Group consists of three Executive Directors and
two non-Executive Directors.
The Board met on 8 occasions during the year Board meetings
to 30 September 2020. The table below sets
out the Board meetings held by the Company
for the financial year ended 30 September
2020 and attendance of each Director:
Executive Directors
George Lucan [08/08]
Carlos Fernandes [08/08]
Andrew Hollis [08/08]
Non-Executive Directors
Patrick Clanwilliam [08/08]
Cameron Buchanan [07/08]
The Group has established an audit committee, a remuneration
committee, a nomination committee and an AIM Rules compliance
committee with formally delegated duties and responsibilities.
Audit committee
The audit committee comprised of Carlos Fernandes, George Lucan
and Patrick Clanwilliam, with Carlos Fernandes as chairman. The
composition of these committees may change over time as the
composition of the Board changes.
The Audit Committee helps the Board discharge its
responsibilities regarding financial reporting, external and
internal audits and controls as well as reviewing the Group's
annual and half-year financial statements, other financial
information and internal Group reporting.
The Auditor Committee Report is presented on page 24 to 25.
Remuneration committee
The remuneration committee comprised of Patrick Clanwilliam and
Cameron Buchanan, with Patrick Clanwilliam as chairman. The
composition of these committees may change over time as the
composition of the Board changes.
The remuneration committee will determine the scale and
structure of the executive directors' and senior employees'
remuneration and the terms of their respective service or
employment contracts, including share option schemes and other
bonus arrangements. The remuneration and terms and conditions of
the non-executive directors of the Group will be set by the
Chairman and executive members of the Board.
The Directors' Remuneration Report is presented on page 26 to
27.
Nomination committee
The nomination committee comprised of Patrick Clanwilliam,
Andrew Hollis and Cameron Buchanan with Patrick Clanwilliam as
chairman. The composition of these committees may change over time
as the composition of the Board changes.
The nomination committee will determine the composition of the
Board of the Group and appointment of senior employees. It will
develop succession plans as necessary and report to the
Directors.
Where new Board appointments are considered the search for
candidates is conducted, and appointments are made, on merit,
against objective criteria and with due regard for the benefits of
diversity on the Board, including gender.
The Board carries out an evaluation of its performance annually,
taking into account the Financial Reporting Council's Guidance on
Board Effectiveness.
AIM Rules compliance committee
The AIM Rules compliance committee comprised of George Lucan,
Cameron Buchanan and Patrick Clanwilliam with George Lucan as
chairman. The composition of these committees may change over time
as the composition of the Board changes.
The AIM Rules compliance committee will ensure that procedures,
resources and controls are in place to ensure that AIM Rules
compliance by the Group is operating effectively at all times and
that the executive directors are communicating effectively with the
Group's nominated adviser regarding the Group's ongoing compliance
with the AIM Rules and in relation to all announcements and
notifications and potential transactions.
The Board will keep the Group's compliance with the new Market
Abuse Regulation (MAR) regime under review and will adopt such
policies and practices as the Board consider necessary to ensure
such compliance from time to time. This includes compliance with
requirements regarding directors' dealings.
The AIM Rules compliance committee met three times during the
period under review to discuss Jonathan Tidswell-Pretorius and
general compliance issues.
Other matters
In 2017, a loan of GBP200,000 was advanced to former director,
Jonathan Tidswell-Pretorius, in connection with settling certain
tax obligations arising from historical company matters, approved
by the non-executive directors in accordance with the Company's
corporate governance guidelines. The loan was repayable on demand
and unsecured, and restrictions were placed on equity or share
option dealing by the director during the tenure of the loan. The
loan was subsequently repaid on 7 January 2020.
The Board believes that the Group has a strong governance
culture and this has been reinforced by the adoption of the QCA
Code and recognition of the key principles of corporate governance
set out in the QCA Code, which the Board continually considers in a
manner appropriate for a company of its size.
Patrick Clanwilliam
Chairman
08 March 2021
The Audit Committee helps the Board discharge its
responsibilities regarding financial reporting, external and
internal audits and controls as well as reviewing the Group's
annual and half-year financial statements, other financial
information and internal Group reporting. This includes:
considering whether the Company has followed appropriate
accounting standards and, where necessary, made appropriate
estimates and judgments taking into account the views of the
external auditors; reviewing the clarity of disclosures in the
financial statements and considering whether the disclosures made
are set properly in context; where the audit committee is not
satisfied with any aspect of the proposed financial reporting of
the Company, reporting its view to the Board of directors;
reviewing material information presented with the financial
statements and corporate governance statements relating to the
audit and to risk management; and reviewing the adequacy and
effectiveness of the Company's internal financial controls and,
unless expressly addressed by a separate board risk committee
composed of independent directors, or by the Board itself, review
the Company's internal control and risk management systems and,
except where dealt with by the Board or risk management committee,
review and approve the statements included in the annual report in
relation to internal control and the management of risk.
The Audit Committee assists by reviewing and monitoring the
extent of non-audit work undertaken by external auditors, advising
on the appointment of external auditors and reviewing the
effectiveness of the Group's internal controls and risk management
systems. The ultimate responsibility for reviewing and approving
the Annual Report and financial statements and the half-yearly
reports remains with the Board.
During the year, no non-audit services were provided to the
group for the year under review. The audit committee considered the
nature, scope of engagement and remuneration paid were such that
the independence and objectivity of the auditors were not impaired.
Fees paid for audit services are disclosed in Note 6.
During the financial year, the Audit Committee met twice with
the auditor, Crowe U.K. LLP, to review audit planning and findings
with regard to the Annual Report and review comments of the interim
financial statements.
Significant reporting issues considered during the year included
the following:
Impairments of oil assets
The Committee has reviewed the carrying values of the Groups oil
assets, comprised of the oil production assets, exploration and
evaluation (E&E) assets. Based on the work performed during the
audit, and through discussions with management, the committee
considers that the carrying value of E&E assets are not
impaired. The committee have considerate prudent not to impair the
oil production assets based on the estimated oil reserves and
forecast level of future production.
Going concern
The Committee also considered the Going Concern basis on which
the accounts have been prepared and can refer shareholders to the
Group's accounting policy set out in Note 3.3 and Note 4 (c). The
directors are satisfied that the going concern basis is appropriate
for the preparation of the financial statements.
Carlos Fernandes
Chairman - Audit Committee
This report sets out the remuneration policy operated by the
Company in respect of the Executive and Non-Executive Directors.
The remuneration policy is the responsibility of the Remuneration
Committee, a sub-committee of the Board. No Director is involved in
discussions relating to their own remuneration.
Remuneration policy
The objective of the proposed remuneration policy is to attract,
retain and motivate high caliber executives to deliver outstanding
shareholder returns and at the same time maintain an appropriate
compensation balance with the other employees of the Group.
Directors' remuneration
The normal remuneration arrangements for Executive Directors
consists of base salary, performance bonuses and other benefits as
determined by the Board. Each of the Executive Directors has a
service agreement that can be terminated at any time by either
party giving to the other twelve months' written notice.
Compensation for loss of office is restricted to base salary and
benefits only.
The remuneration packages for the Executive Directors are
detailed below:
-- Base Salary:
Annual review of the base salaries of the Executive Directors
are concluded after taking into account the Executive Directors'
role, responsibilities and contribution to the Group
performance.
-- Performance Bonus:
Bonus arrangements are discretionary and are payable depending
on the performance of the Executive Directors in meeting their key
performance indicators and in the wider context with the
performance of the Group.
-- Benefits:
Benefits include payments for provident funds that are mandatory
and statutory pension payments as required by laws of the resident
countries of the Executive Directors, health insurance and other
benefits.
-- Longer term incentives:
In order to further incentivise the Directors and employees, and
align their interests with shareholders, the Company has granted
share options in the current and previous years, as set out on page
27. The share options will vest at various future dates as
described in the note 16 to the financial statements. There are no
conditions attached to vesting other than service conditions.
Non-Executive Directors are remunerated solely in the form of
Director Fees determined by the Board and are not entitled to
pensions, annual bonuses or employee benefits.
Performance evaluation
All Directors undergo a performance evaluation before being
proposed for re- election to ensure that their performance is and
continues to be effective, that where appropriate they maintain
their independence and that they are demonstrating continued
commitment to the role.
Appraisals are carried out each year with all Executive
Directors. All continuing Directors stand for re-election every 3
years. Succession planning at the current time is limited due to
the current size of the Board.
The tables below set out the respective Directors' remuneration
and fees:
2020 Salary Termination Share based Total
payment payment
GBP'000 GBP'000 GBP'000
George Lucan 120 - - 120
Andrew Hollis 120 - - 120
Carlos Fernandes 120 - - 120
Cameron Buchanan 30 - - 30
Patrick Clanwilliam 60 - - 60
--------------- --------------- -------------- -------------
415 - - 415
=========== =========== ========== =========
2019 Salary Termination Share based Total
payment payment
GBP'000 GBP'000 GBP'000
George Lucan 82 - 10 92
Andrew Hollis 60 - 10 70
Carlos Fernandes 60 - 10 70
Cameron Buchanan 26 - 10 36
Patrick Clanwilliam 68 - 10 78
Paul Vonk 30 300 - 330
Chris De Goey 8 - - 8
Robert Shepherd 6 - - 6
--------------- --------------- -------------- -------------
340 300 50 690
=========== =========== ========== =========
The Remuneration Committee met twice during the year to review
the scale and structure of the executive directors' and senior
employees' remuneration.
Patrick Clanwilliam
Chairman - Remuneration Committee
George Lucan
Managing Director
Experienced finance professional with over thirty years' behind
him in debt and equity markets. After graduating from Cambridge
University, he began his career at Dresdner Kleinwort Benson where
he spent 10 years, mainly within the Structured Finance team, and
continued in alternative fund management, most recently with Rudolf
Wolff Limited. He brings, in addition, private equity experience in
the fields of energy and alternative energy.
Andrew Hollis
Technical Director
Andrew has over 40 years' experience in all technical aspects of
oil and gas, exploration and production. After 25 years in
petroleum and reservoir engineering for British Gas he became an
independent consultant specialising in Russia, the FSU and Eastern
Europe and also provided specialist reserves determination skills
to Gaffney Cline and Associates.
Carlos Fernandes
Finance Director
Carlos has been part of the Angus team since 2013 and has seen
the company's transition from private to public. Prior to his
appointment as Finance Director, he was the Chief Financial Officer
of the group. He has over 14 years commercial experience working in
the Mining and Oil & Gas industry.
Cameron Buchanan
Non-Executive Director
Cameron Buchanan is a former Scottish politician, who served as
a Scottish Conservative Party Member of the Scottish Parliament for
the Lothian region from 2013 to 2016. After a career in the
Scottish textile industry, he also served as vice-chairman of the
Scottish Conservatives. Buchanan was educated at St Edward's School
& Sorbonne University.
Patrick Clanwilliam
Non-Executive Chairman
Paddy's previous responsibilities include the Chair of Eurasia
Drilling Company Limited (EDCL.LI) the largest drilling and
work-over company in Eurasia. He is also a former non-executive
director of SOMA Oil & Gas, a private exploration play in
deepwater offshore Somalia and OJSC Polyus Gold (OPYGY) the largest
Russian gold mining company by market share .
Directors' Report
The Directors present their report together with the audited
consolidated financial statements of Angus Energy plc for the year
ended 30 September 2020.
Results and Dividends
The Group recorded a loss after tax of GBP2.516m for the year
(2019: GBP5.043m). The Directors do not recommend the payment of a
dividend.
Directors
The Directors who were in office during the year and up to the
date of signing the financial statements, unless stated, were:
Executive Director
George Lucan
Carlos Fernandes
Andrew Hollis
Non-Executive Director
Patrick Clanwilliam
Cameron Buchanan
The Directors of the Company at the date of this report, and
their biographical summaries, are given on page 28.
The Directors' remuneration is detailed in the Directors'
Remuneration Report on page 27. All Directors benefit from the
provision of Directors' and Officers' indemnity insurance policies.
Premiums payable to third parties were GBP39,200 (2019 -
7,840).
Research and development
As disclosed in Note 11 and 12, the Group incurred expenditure
in development of oil and gas fields. An initial pilot study was
commissioned by the company to assess the use of these remaining
wells with respect to a geothermal/heat capture project. Initial
findings appear positive, and the company is now assessing a way
forward on this. There is no other research and development
activity during the year under review.
Share Capital
At the date of this report ordinary shares are issued and fully
paid. Detail of movement in share capital during the year is given
in note 15 to the financial statements.
Substantial Shareholders
As of the date of this report the Group had been notified of the
following interests of 3% or more in the Group's ordinary share
capital:
Percentage of
shareholding
G.P (Jersey) Limited 8.43%
Knowe Properties Limited 6.60%
HSBC Bank Plc 5.87%
JDA Consulting Ltd 3.27%
Share options
There were no Share Options issued during the reporting
period.
Financial Instruments
The financial risk management objectives and policies of the
Group in relation to the use of financial instruments and the
exposure of the Group and its subsidiary undertakings to its main
risks, credit risk and liquidity risk, are set out in note 22 to
the financial statements.
Employees
The Group had 11 employees as at 30 September 2020 (2019: 11).
Employees are encouraged to directly participate in the business
through an Enterprise Management Incentive Scheme, which set out in
note 16 to the financial statements.
Going Concern
As disclosed in Note 3.3 to the financial statements, it refers
to the assumptions made by the Directors when concluding that it
remains appropriate to prepare the financial statements on the
going concern basis.
Events after the reporting period
Events after the reporting period have been disclosed in Note
26.
Disclosure of Information to the Auditor
In the case of each person who was a Director at the time this
report was approved:
-- so far as the Director was aware there was no relevant audit
information of which the Company's auditor was unaware; and
-- the Director has taken all steps that he ought to have taken
as a Director to make himself aware of any relevant audit
information and to establish that the Company's auditor was aware
of that information.
Auditor
A resolution to reappoint the auditor, Crowe U.K. LLP, will be
proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors and signed on behalf of the
Board.
George Lucan
Managing Director
Statement of Director's Responsibilities
The Directors are responsible for preparing the Strategic
Report, Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare
Group financial statements in accordance with International
Financial Reporting Standards ('IFRS') as adopted by the European
Union ('EU') and have elected under the company law to prepare the
Company statements in accordance with UK accounting standards.
The financial statements are required by law and applicable
accounting standards to present fairly the financial position of
the Group and the Company and the financial performance of the
Group. The Companies Act 2006 provides in relation to such
financial statements that references in the relevant part of that
Act to financial statements giving a true and fair view are
references to their achieving a fair presentation.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of
the profit or loss of the Group for that period.
In preparing the Group and Company financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- prepare the Strategic Report and Directors' report which
comply with the requirements of the Companies Act 2006;
-- prepare financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and 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 Angus
Energy PLC website www.angusenergy.co.uk .
Legislation in the United Kingdom governing the preparation and
dissemination of financial statement may differ from legislation in
other jurisdictions.
Stakeholder Engagement
As a public company operating in one of the most regulated
industries Angus Energy recognise that stakeholder engagement is a
key foundation for the long term success of the Group. Stakeholders
include not only our shareholders, lenders, and our partners, but
also our suppliers & customers, our workforce, governments
& regulators, and the communities in which we operate. The
Company seeks out appropriate platforms to communicate to a broad
audience its current activities, strategic goals and broad view of
the sector and other related issues.
The section below, describes how the directors of the Company
have regard for the matters set out in Section 172(1) of the
Companies Act 2006, these are:
-- the likely consequences of any decision in the long term
-- the interests of the company's employees,
-- the need to foster the company's business relationships with suppliers, customers and others,
-- the impact of the company's operations on the community and the environment,
-- the desirability of the company maintaining a reputation for
high standards of business conduct, and
-- the need to act fairly as between members of the company.
The section below forms the Board's statement on such matters as
required by the Act. Further information regarding Angus's
assessment of environmental and community issues associated with
our operations, can be found in the Sustainability Review on pages
10 and 11. Review of the key decisions and issues
discussed in Board meetings and by various committees in 2020 is
contained in the Corporate Governance Statement from pages 17 to
23.
Shareholders and Lenders
Angus seeks to develop an investor base of long-term holders
that are aligned with our strategy. By clearly communicating our
strategy and objectives, we maintain continued support for what we
do.
Important issues include:
-- Sustainable financial and operational performance
-- Continued revue of new opportunities which can leverage our
cost discipline and technical skills base
-- Sustainable financial and operational performance
-- Capital allocation
There is regular dialogue between both institutional and retail
investors and lenders through meetings, calls, conferences,
presentations and through our Investor Questions on our
website.
Highlights include:
-- Investor conference calls
-- Online interviews
-- Investor questions regularly answered on the company's website
-- 4% per annum GBP1,400,000 Convertible Loan Note issued on 20 April 2020
-- Signing MOU with Aleph Commodities for GBP12m Saltfleeby Debt Facility
Partners
Sharing of risk is a fundamental component of our industry and
by maintaining aligned and collaborative relationships with our
joint venture partners, we can ensure that maximum value can be
extracted from our operations in a safe and sustainable manner.
Important issues include:
-- Operational performance & HSE
-- Budget setting and work programs
Angus ensures that we maintain an open dialogue with all our
partners in the Saltfleetby, Balcombe, Lidsey and Brockham licence.
We seek to ensure that all partners are aligned around common
objectives for the asset and maintain safe and efficient
operations.
Highlights include:
-- Completion of the Saltfleetby Farm-in agreement
-- Re-mapping of the field with our Lidsey partners
Customers & suppliers
Angus has through the year's development good customer base. The
supply chain is managed by Angus on behalf of its partners. We have
further developed strong relationships with key corporate
suppliers.
Important issues include:
-- Contract management strategy
-- Uninterrupted service for customers
-- Enhance value
Engagement with suppliers usually takes place with the operator
but we are closely involved and help shape the strategy and
timing.
Highlights include:
-- Signing GSA for the entire production from the Saltfleetby
Gas Field with Shell Energy Europe Limited, a division of Royal
Dutch Shell plc
-- Procurement of equipment for the Saltfleetby development
Workforce
Our current and future success is underpinned by our ability to
engage, motivate and adapt our workforce. Creating the right
environment for employees where their various strengths are
recognised and their contributions are valued, helps to ensure that
we can deliver our shared objectives.
Important issues include:
-- Group strategy
-- Diversity of thinking
-- Corporate culture
During 2020, internal communications were upscaled, so employees
were kept informed of all the workstreams across the Company and
helped to raise key issues with directors and executives.
Highlights include:
-- Production & strategy updates
-- Twice daily conference calls
-- All staff involvement in CSR initiatives
Government & Regulators
Maintaining respectful and collaborative relationships with our
regulatory authorities is vital to our 'licence to operate'. We
believe that the strength of these relationships will allow us to
make a sustainable and beneficial contribution to the regions in
which we operate.
Important issues include:
-- Renewal of Licences
-- Identifying and securing new opportunities
-- Providing views on upcoming legislation and factors that are important to the industry
-- CSR commitments
Angus maintains an open dialogue with the OGA, EA, HSE and local
authorities in the areas it operates. Angus is also a member of
UKOOG, OGUK and IGEM.
Highlights include:
-- Approval of the transfer of the Saltfleetby Licence by the OGA
-- Approval of the transfer of the Saltfleetby Licence Operatorship by the OGA
-- Successful planning and permitting permissions for the
Saltfleetby pipeline and surface upgrades
Communities & Environment
As a responsible OGA approved and Environment Agency ("EA")
permitted UK operator, Angus Energy is committed to utilising
industry best practices and achieving the highest standards of
environmental management and safety. Angus Energy also seeks and
maintains positive relationships with its local communities.
Important issues include:
-- Continuously assess and monitor environmental impact
-- Promote internally and across our industry best practices for
environmental management and safety
-- Constant attention to maintaining our exemplary track record of safe oil and gas production
-- Open and honest dialogue
-- Engagement with stakeholders at all stages of development
-- Proactively address local concerns
-- Actively minimise impact on our neighbours
Regular engagement with HSE and EA officers occurs through
operational committee meetings maintaining positive focus on
health, safety and the environment.
Highlights include:
-- Zero environmental or HSE incidents during operations in 2020
-- Continued community engagement
-- Continued awards through the company's local scholarship program
-- Discussions to become an active participant in the UN Global
Compact. As part of this partnership, we will make an annual public
disclosure on the progress we have made in implementing their 10
sustainability principles and in supporting broader UN development
goals.
Opinion
We have audited the financial statements of Angus Energy plc
(the "Parent Company") and its subsidiaries (the "Group") for the
year ended 30 September 2020, which comprise:
-- the Group statement of comprehensive income for the year ended 30 September 2020;
-- the Group and parent company statements of financial position as at 30 September 2020;
-- the Group statement of cash flows for the year then ended;
-- the Group and parent company statements of changes in equity for the year then ended; and
-- the notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. The financial reporting framework that has been
applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' (United Kingdom Generally Accepted Accounting
Practice).
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent
Company's affairs as at 30 September 2020 and of the Group's
loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and Parent Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard, 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 related to going concern
On forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
note 3.3 to the financial statements concerning the group and
company's ability to continue as a going concern. The financial
statements have been prepared on the going concern basis, which
depends on the group and company's ability to raise further
financing to cover its ongoing working capital requirements. These
conditions, along with other matters explained in note 3.3 to the
financial statements, indicate the existence of a material
uncertainty which may cast a significant doubt about the group and
company's ability to continue as a going concern. The financial
statements do not include adjustments that would result if the
group and company were unable to continue as a going concern.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
GBP250,000 (2019: GBP330,000), based on 2% of Group total
assets.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for
related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of GBP10,000 (2019:
GBP13,750). Errors below that threshold would also be reported
to it if, in our opinion as auditor, disclosure was required on
qualitative grounds.
Overview of the scope of our audit
Our Group audit scope included a full audit of all three
reporting entities which account for 100% of
the Group's net assets and loss before tax.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included 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 financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our
audit.
Key audit matter How the scope of our audit addressed the key
audit matter
==================================== ==========================================================================
Carrying value of oil
& gas production assets We focused on this area due to the significance
of the carrying value of the assets. The risk
At 30 September 2020, of impairment was considered likely to be highly
the carrying value of sensitive to assumptions and estimates about
oil & gas production future oil and gas prices and discount rate.
assets was GBP6.406 Other assumption include exchange rates, future
million. production levels, reserves and operating costs.
The recoverable value We evaluated management's assessment of indicators
of the Brockham and of impairment and recoverability assessment
Lidsey production assets for the Group's oil & gas production assets.
are based on the net We have:
present value of estimated * tested price and discount rate assumptions by
future net cash flow comparing forecast oil price assumptions to the
after the application latest market evidence available and reviewed the
of an appropriate discount reasonableness of the discount rate applied;
rate. If the production
rate or reserve quantity
are less than anticipated, * tested the accuracy of the forecast cash flows and
appropriate adjustments the assumptions used within the cash flow projection
would be necessary to model.
further impair the carrying
value of these assets.
* We assessed the quality of management's previous
budgets and forecasts by comparing them to actual
performance.
We have considered the adequacy of the disclosure
to the financial statements in respect of the
impairment recognised and the work performed
by management including the key judgement and
sensitivity analysis presented in note 4 and
note 11 respectively.
Carrying value of exploration
and evaluation (E&E) assets We reviewed management's assessment
of indicators of impairment for the
At 30 September 2020, ongoing exploration assets under IFRS
the carrying value of 6 including the review of the validity
exploration and evaluation of the licence and the progress of the
assets was GBP 8.183 million. technical work to date. In
addition, we evaluated management's
The Balcombe and Saltfleetby Net Present Value (NPV) models for the
sites are still in the Balcombe assets. We challenged the key
exploration and evaluation estimates and assumptions used by management.
phase as technical and
economic feasibility have We also reviewed management ' s assessment
yet to be established. of the future decommissioning costs
and assessed the appropriateness of
The recoverable value the assumptions concerning the timing
of these assets are based and discounting of the estimated cost
on the net present value of decommissioning.
of estimated future net
cash flow after the application We reviewed the disclosure made concerning
of an appropriate discount this matter to ensure that it is consistent
rate. If the production with our understanding.
rate or reserve quantity
are less than anticipated,
appropriate adjustments
would be necessary to
further impair the carrying
value of these assets.
==================================== ======================================================================
Going concern Our procedures on the Directors' going
concern assessment were as follows:
The Directors ' are responsible
for assessing whether the * We reviewed management's financial projections for
preparation of the accounts the Group for a period of more than 12 months from
on a going concern basis the date of approval of the financial statements.
is appropriate. Their
assessment
must cover a minimum period * We challenged management on the assumptions
of 12 months from the date underlying those projections and sensitised them to
of the financial statements. reduce anticipated net cash inflows from future
trading activities.
The Company has been operating
at a loss for a number
of years and has 2 sites * We obtained the latest financial results post year
still in the exploration end 30 September 2020 to review how the company is
and evaluation phase, and trending toward achieving the forecast.
considering the liquidity
position of the entity
for the year ended 30 September * We performed sensitivity analysis on key inputs of
2020, there is risk that the forecast by calculating the impact of various
the preparation of the scenarios and considering the impact on the Company's
accounts on a going concern ability to continue as a going concern in the event
basis may not be appropriate of not meeting the forecast. This included what
or that adequate disclosures management considered to be a severe worst-case
are not made in the financial scenario, modelled with respect to COVID-19 impacts
statements. and management's experience of matters over the
course of 2020.
Management has also considered
the range of possible impacts
of COVID-19 and the potential
continuing disruption to We assessed the completeness and accuracy
the wider business environment. of the matters described in the going concern
disclosure within the significant accounting
policies and the critical judgements, as
set out in Note 3.3 and 4 respectively.
======================================= =============================================================================
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the 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 financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the 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 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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our
audit
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the
Parent Company and their environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement set out on page 32, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company'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 the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's 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 financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 auditor's 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.
John Glasby
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
55 Ludgate Hill
London EC4M 7JW
Date: 08 March 2021
2020 2019
Note GBP'000 GBP'000
Revenue 5 68 200
Cost of sales (162) (295)
---------------- -------
Gross loss (94) (95)
Administrative expenses (2,060) (3,976)
Impairment charge 12 (300) (900)
Share option charge 16 (30) (79)
---------------- -------
Operating loss (2,484) (5,050)
Finance income 7 - 7
Finance cost 7 (32) -
---------------- -------
Loss before taxation (2,516) (5,043)
Taxation 9 - -
---------------- -------
Loss for the year (2,516) (5,043)
---------------- -------
Total comprehensive loss for the year (2,516) (5,043)
---------------- -------
Loss for the year attributable to:
Owners of the parent company (2,516) (5,043)
---------------- -------
Total comprehensive loss attributable
to:
Owners of the parent company (2,516) (5,043)
---------------- -------
(2,516) (5,043)
================ =======
Earnings per share (EPS) attributable
to owners of the parent: 18
Basic and diluted EPS (in pence) (0.43) (1.08)
The notes on page 47 to 69 form part of these of financial
statements
All amounts are derived from continuing operations.
2020 2019
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 11 14
Exploration and evaluation assets 12 8,183 5,878
Oil & gas production assets 11 6,406 6,416
Lease assets 25 35 -
-------- --------
Total non-current assets 14,635 12,308
-------- --------
Current assets
Trade and other receivables 14 609 794
Cash and cash equivalents 1,852 3,419
-------- --------
Total current assets 2,461 4,213
-------- --------
TOTAL ASSETS 17,096 16,521
======== ========
EQUITY
Equity attributable to owners of
the parent:
Share capital 15 1,430 1,082
Share premium 15 21,982 21,117
Merger reserve 17 (200) (200)
Loan note reserve 21 106 -
Accumulated loss (12,047) (9,561)
-------- --------
TOTAL EQUITY 11,271 12,438
======== ========
Current liabilities
Trade and other payables 19 1,488 1,031
-------- --------
Total current liabilities 1,488 1,031
-------- --------
Non-current Liabilities
Provisions 20 3,007 3,052
Trade and other payables 19 1,330 -
-------- --------
Total non-current liabilities 4,337 3,052
-------- --------
TOTAL LIABILITIES 5,825 4,083
-------- --------
TOTAL EQUITY AND LIABILITIES 17,096 16,521
======== ========
The notes on page 47 to 69 form part of these of financial
statements
The financial statements were approved by the Board of Directors
and authorized for issue on 08 March 2021 and were signed on its
behalf by:
George Lucan - Director
Company number: 09616076
Share Merger Loan Note Accumulated
Share capital premium reserve reserve Loss Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- -------- ------------ --------- ----------- -----------------
Balance at 30 September
2018 763 14,142 (200) - (4,597) 10,108
Loss for the year - - - - (5,043) (5,043)
------- -------- ------------ --------- ----------- -----------------
Total comprehensive income
for the year - - - - (5,043) (5,043)
------- -------- ------------ --------- ----------- -----------------
Transaction with owners
Issue of shares 319 7,450 - - - 7,769
Less: issuance costs - (475) - - - (475)
Grant of share options - - - - 79 79
------- -------- ------------ --------- ----------- -----------------
Balance at 30 September
2019 1,082 21,117 (200) - (9,561) 12,438
------- -------- ------------ --------- ----------- -----------------
Loss for the year - - - - (2,516) (2,516)
------- -------- ------------ --------- ----------- -----------------
Total comprehensive loss
for the year - - - - (2,516) (2,516)
------- -------- ------------ --------- ----------- -----------------
Transaction with owners
Issue of shares 348 1,051 - - - 1,399
Less: issuance costs - (186) - - - (186)
Issue of convertible
loan note - - - 106 106
Grant of share options - - - - 30 30
------- -------- ------------ --------- ----------- -----------------
Balance at 30 September
2020 1,430 21,982 (200) 106 (12,047) 11,271
------- -------- ------------ --------- ----------- -----------------
The notes on page 47 to 69 form part of these of financial
statements
Year ended Year ended
30 September 30 September
2020 2019
GBP'000 GBP'000
Cash flow from operating activities
Loss for the period before taxation (2,516) (5,043)
Adjustment for:
Share option charge 30 79
Equity settled in lieu professional
fees - 60
Interest receivables - (7)
Interest payable 32 -
Impairment charge 300 900
Depreciation of owned assets 147 36
--------- ---------------------
Cash used in operating activities
before changes in working capital (2,007) (3,975)
Change in trade and other receivables 185 3
Change in other payables and accruals 369 (408)
Lease principal repayments (138) -
--------- ---------------------
Cash used in operating activities
before tax (1,591) (4,380)
Income tax paid - -
--------- ---------------------
Net cash flow used in operations (1,591) (4,380)
--------- ---------------------
Cash flow from investing activities
Proceeds from acquisition exploration
and evaluation assets - 2,500
Decommissioning cost (45)
Acquisition of property, plant and
equipment 10 3 -
Acquisition of exploration and evaluation
assets 12 (2,605) (660)
Acquisition of oil production assets 11 - (1,684)
--------- ---------------------
Net cash flow from investing activities (2,647) 156
--------- ---------------------
Cash flow from financing activities
Net proceeds from issuance of convertible 1,458 -
loan notes
Proceeds from issuance of shares 1,213 6,797
--------- ---------------------
Net cash flow from financing activities 2,671 6,797
--------- ---------------------
Net increase/(decrease) in cash &
cash equivalents (1,567) 2,573
Cash and equivalent at beginning
of period 3,419 846
--------- ---------------------
Cash and equivalent at end of period 1,852 3,419
========= =====================
Details of the non-cash transaction are disclosed in note
16.
The notes on page 47 to 69 form part of these of financial
statements
1. General information
Angus Energy Plc (the "Company") is incorporated and domiciled
in the United Kingdom. The address of the
registered office is Building 3 Chiswick Park, 566 Chiswick High
Road, London, W4 5YA.
The principal activity of the Company is that of investment
holding. The principal activity of the Group is that of oil and gas
extraction for distribution to third parties. The principal
activities of the various operating subsidiaries are disclosed in
note 13.
2. Presentation of financial statements
The financial statements have been presented in Pounds Sterling
(GBP) as this is the currency of the primary economic environment
that the group operates in. The amount is rounded to the nearest
thousand (GBP'000), unless otherwise stated.
3. Accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below.
3.1 Basis of preparation
These financial statements have been prepared in accordance with
International financial Reporting standards (IFRSs) as adopted by
the European Union and the Companies Act 2006. The financial
statements have been prepared on the historical cost basis except
for certain assets which are stated at their fair value.
3.2 New standards, amendments to and interpretations to published standards not yet effect
The Directors have considered those standards and
interpretations, which have not been applied in the financial
statements but are relevant to the Group's operations, that are in
issue but not yet effective and do not consider that they will have
a material impact on the future results of the Group.
3.3 Going concern
The consolidated financial statements have been prepared on a
going concern basis. The Group made a loss for the year of GBP2.516
million (2019: loss of GBP5.04 million) and recorded a net cash
outflow from operating activities of GBP1.592 million (2019:
GBP4.38 million).
The Group meets its day to day working capital requirements
through existing cash reserves. As at 30 September 2020, the Group
had GBP1.85 million of available cash. Subsequent to the year end
the Group raised gross proceeds of GBP1,749,990 as a result of a
placing of new ordinary shares.
The COVID-19 pandemic has not had a significant immediate impact
on the company's operations. The Oil and Gas industry has been
deemed critical and thus we have been allowed to continue
operations. The Directors are aware that if the current situation
becomes prolonged then this may change. The consolidated financial
statements have been prepared on a going concern basis.
In response to this extraordinary period, the Directors have
taken the prudent decision to introduce cost saving measures where
possible to preserve working capital. The Directors have assessed
the Group's working capital forecasts for a minimum of 12 months
from the date of the approval of these financial statements. In
undertaking this assessment, the Directors have reviewed the
underlying business risks, and the potential implications these
risks would have on the Group's liquidity and its business model
over the assessment period. This assessment included a detailed
cash flow analysis prepared by the management, and they also
considered several reasonably plausible downside scenarios. The
scenarios included consideration of the likelihood of not closing
the Saltfleetby debt facility, as well as considering potential
delays to expected future revenue. In making their overall
assessment the Directors took into account the advanced stage of
the documentation in relation to the debt facility and the
indicative commitments received to date. In respect of Balcombe the
Directors have considered the likelihood of a successful appeal.
Although there will remain material uncertainty until the funds
have been drawn down, the Directors are confident in closing the
facility imminently. Based on the current management's plan,
management considered that the working capital from the expected
revenue generation and the Saltfleetby Debt Financing Facility are
sufficient for the expenditure to date as well as the planned
forecast expenditure for the forthcoming twelve months from the
date of the approval of this financial statement. As a result of
that review the Directors consider that it is appropriate to adopt
the going concern basis of preparation.
As noted above, in the event that the Group is not successful in
concluding the debt financing arrangements, there would exist a
material uncertainty that may cast doubt regarding the Group's
ability to continue as a going concern and therefore, it might be
required to raise additional funding to realise its assets and
extinguish its liabilities in the normal course of business and at
the amounts stated in the report.
These financial statements do not include any adjustment that
may result from any significant changes in the assumption used.
3.4 Basis of consolidation
The consolidated financial statements comprise the financial
information of the Company and its subsidiaries (the "Group") made
up to the end of the reporting period. Control is achieved when the
Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those
returns through its power over the investee.
The consolidated financial statements present the results of the
Company and its subsidiaries and joint arrangements as if they
formed a single entity. Inter-company transactions and balances
between group companies are therefore eliminated in full. The
financial information of subsidiaries is included in the Group's
financial statements from the date that control commences until the
date that control ceases.
Profit or loss and each component of other comprehensive income
(OCI) are attributed to the equity holders of the parent of the
Group. When necessary, adjustments are made to the financial
information of subsidiaries to bring their accounting policies into
line with the Group's accounting policies. All intragroup assets
and liabilities, equity, income, expenses and cash flows relating
to transactions between members of the Group are eliminated in full
on consolidation.
The acquisition of Angus Energy Holding Limited by the Company,
by way of share exchange, for the year ended 30 September 2016 was
that of a re-organisation of entities which were under common
control. As such, that combination also falls outside the scope of
IFRS 3 'Business Combinations' (Revised 2008). The Directors have,
therefore, decided that it is appropriate to reflect the
combination using the merger basis of accounting in order to give a
true and fair view. No fair value adjustments were made as a result
of that combination.
3.5 Property, plant and equipment
All fixed assets are initially recorded at cost. Depreciation is
calculated so as to write off the cost of an asset, less its
estimated residual value, over the useful economic life of that
asset as follows:
Fixtures and fittings - 25% straight line
Plant and machinery - 20% straight line
Motor vehicles - 20% straight line
Lease assets - over the term of the lease
3.6 Oil and natural gas exploration and evaluation (E&E) expenditure
Oil and natural gas exploration and evaluation expenditure is
accounted for using the successful efforts method of
accounting.
(a) Licence and property acquisition costs
Licence and property leasehold acquisition costs are capitalised
within intangible fixed assets and amortised on a straight-line
basis over the estimated period of exploration. Upon determination
of economically recoverable reserves amortisation ceases and the
remaining costs are aggregated with exploration expenditure and
held on a field-by-field basis as proved properties awaiting
determination within intangible fixed assets. When development is
sanctioned, the relevant expenditure is transferred to tangible
production assets.
(b) Exploration expenditure
Geological and geophysical exploration costs are charged against
income as incurred. Costs directly associated with an exploration
well are capitalised as an intangible asset until drilling of the
well is complete and the results have been evaluated. If
hydrocarbons are not found, the exploration expenditure is written
off as a dry hole. If hydrocarbons are found, and, subject to
further appraisal activity, are likely to be capable of commercial
development, the costs continue to be carried as an asset. All such
carried costs are subject to regular technical, commercial
management review to confirm the continued intent to develop or
otherwise extract value from the discovery. When this is no longer
the case, the costs are written off. When proven and probable
reserves of oil and gas are determined and development is
sanctioned, the relevant expenditure is transferred to tangible
production assets.
(c) Development expenditure
Expenditure on the construction, installation and completion of
infrastructure facilities such as platforms, pipelines and the
drilling of development wells, including unsuccessful development
or delineation wells, is capitalised within tangible production
assets.
(d) Maintenance expenditure
Expenditure on major maintenance, refits or repairs is
capitalised where it enhances the performance of an asset above its
originally assessed standard of performance; replaces an asset or
part of an asset which was separately depreciated and which is then
written off; or restores the economic benefits of an asset which
has been fully depreciated. All other maintenance expenditure is
charged to income as incurred.
Treatment of E&E assets at conclusion of appraisal
activities
Intangible E&E assets related to each exploration
licence/prospect are carried forward, until the existence (or
otherwise) of commercial reserves has been determined. If
commercial reserves have been discovered, the related E&E
assets are assessed for impairment on a cost pool basis as set out
below, and any impairment loss of the relevant E&E assets is
then reclassified as development and production assets.
3.7 Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Loan and receivables
Loans and receivables are recognised initially at fair value
plus any directly attributable transaction costs. Subsequent to
initial recognition, loans and receivables are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade receivables are recognised initially at the transaction
price and subsequently measured at amortised cost, less any
impairment losses.
Trade and other payables
Trade and other payables are initially measured at fair value,
net of transaction costs, and are subsequently measured at
amortised cost, where applicable, using the effective interest
method, with interest expense recognised on an effective yield
basis.
3.8 Impairment of assets
(a) Financial assets
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a historical provision matrix in the determination of
the lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognised
within administration costs in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for receivables from related parties and
loans to related parties are recognised based on a forward looking
expected credit loss model. The methodology used to determine the
amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of
the financial asset. For those for which credit risk has increased
significantly, lifetime expected credit losses are recognised,
unless further information becomes available contrary to the
increased credit risk. For those that are determined to be
permanently credit impaired, lifetime expected credit losses are
recognised.
(b) Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For assets that have indefinite lives, the recoverable
amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and risk specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the "cash generating unit").
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in the profit or loss.
3.9 Oil and gas production assets
Expenditures related to the construction, installation or
completion of infrastructure facilities, such as platforms and
pipelines, and the drilling of development wells, including
delineation wells, is capitalised within oil and gas production
assets. The initial cost of an asset comprises its purchase price
or construction cost, any costs directly attributable to bringing
the asset into operation, the initial estimate of the well asset
retirement obligation, for qualifying assets, and borrowing
costs.
Oil and gas production assets are depreciated using a unit of
production method. The cost of producing wells is amortised over
total proved and undeveloped oil and gas reserves of the field
concerned, except in the case of assets whose useful life is
shorter than the lifetime of the field, in which case the
straight-line method is applied. Rights and concessions are
depleted on the unit-of-production basis over the total proved
developed and undeveloped reserves of the relevant area. The
unit-of-production rate calculation for the depreciation of field
development costs takes into account expenditures incurred to date,
together with sanctioned future development expenditure.
In accounting for a farm-out arrangement outside the exploration
and evaluation phase, the Group:
-- Derecognises the proportion of the asset that it has sold to the farmee
-- Recognises the consideration received or receivable from the
farmee, which represents the cash received and/or the farmee's
obligation to fund the capital expenditure in relation to the
interest retained by the farmor
-- Recognises a gain or loss on the transaction for the
difference between the net disposal proceeds and the carrying
amount of the asset disposed of. A gain is recognised only when the
value of the consideration can be determined reliably. If not, then
the Group accounts for the consideration received as a reduction in
the carrying amount of the underlying assets
-- Tests the retained interests for impairment if the terms of
the arrangement indicate that the retained interest may be
impaired
The consideration receivable on disposal of an item of property,
plant and equipment or an intangible asset is recognised initially
at its fair value by the Group. However, if payment for the item is
deferred, the consideration received is recognised initially at the
cash price equivalent. The difference between the nominal amount of
the consideration and the cash price equivalent is recognised as
interest revenue. Any part of the consideration that is receivable
in the form of cash is treated as a financial asset and is
accounted for at amortised cost.
3.10 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from
past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group. It can also be a
present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will
be required or the amount of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclosed in the
notes to the accounts. When a change in the probability of an
outflow occurs so that the outflow is probable, it will then be
recognised as a provision. A contingent asset is a possible asset
that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain
events not wholly within the control of the Group. Contingent
assets are not recognised but are disclosed in the notes to the
accounts when an inflow of economic benefits is probable. When
inflow is virtually certain, an asset is recognised.
3.11 Operating lease agreements
Rentals applicable to operating leases where substantially all
of the benefits and risks of ownership remain with the lessor are
charged against profits on a straight line basis over the period of
the lease.
3.12 Income tax
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported comprehensive
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are not taxable or tax deductible. The Group's
liability for current tax is calculated using tax rates (and tax
laws) that have been enacted or substantively enacted in countries
where the Group and its subsidiaries operate by the end of the
financial period.
Deferred income taxes are calculated using the balance sheet
method. Deferred tax is generally provided on the temporary
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and
joint ventures is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future. In addition, tax
losses available to be carried forward as well as other income tax
credits to the Group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at
the reporting date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the Consolidated Statement of
Comprehensive Income, except where they relate to items that are
charged or credited directly to equity in which case the related
deferred tax is also charged or credited directly to equity.
3.13 Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the reporting date.
Transactions in foreign currencies are translated into sterling at
the rate of exchange ruling at the date of the transaction.
Exchange differences are taken into account in arriving at the
operating profit or loss.
3.14 Decommissioning
Provision for decommissioning is recognised in full on the
installation of oil and gas production facilities. The amount
recognised is the present value of the estimated future expenditure
determined in accordance with local conditions and requirements. A
corresponding tangible fixed asset of an amount equivalent to the
provision is also created. This is subsequently depreciated as part
of the capital costs of the production and transportation
facilities. Any change in the present value of the estimated
expenditure is reflected in an adjustment to the provision and
fixed asset.
3.15 Revenue
As described in note 5, the Group's revenue is driven by sale of
crude oil, the goods are sold on their own in separate identified
contracts with customers. Delivery point of the sale is the point
at which Crude oil passes from the delivery tanker to the customers
specified storage terminal, which represents the point at which the
Group fulfils its single performance obligation to its customer
under contracts for the sale of crude oil. Revenue from the
production of oil in which the Group has an interest with other
producers is recognised proportionately based on the Group's
working interest and the terms of the relevant production sharing
contracts.
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the applicable effective interest
rate.
3.16 Share-based payments
The Group has applied IFRS 2 Share-based Payment for all grants
of equity instruments.
The Group issues equity-settled share-based payments to its
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of the shares that will eventually vest.
Fair value is measured using the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. The inputs to
the model include: the share price at the date of grant, exercise
price expected volatility, risk free rate of interest.
4 Critical accounting estimates and sources of estimation uncertainty
In applying the accounting policies, the directors may at times
require to make critical accounting judgements and estimates about
the carrying amount of assets and liabilities. These estimates and
assumptions, when made, are based on historical experience and
other factors that the directors consider are relevant.
The key estimates and assumptions concerning the future and
other key sources of estimation uncertainty at the end of the
financial year, that have significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are reviewed are as stated below.
Key accounting judgements
(a) Impairment of non-current asset
The Group's non-current assets represent its most significant
assets, comprising oil production assets, exploration and
evaluation (E&E) assets on its onshore site.
Management is required to assess exploration and evaluation
(E&E) assets for indicators of impairment and has considered
the economic value of individual E&E assets. The carrying
amount of the E&E asset are subject to a separate review for
indicators of impairment, by reference to the impairment indicators
set out in IFRS 6, which is inherently judgmental.
Processing operations are large, scarce assets requiring
significant technical and financial resources to operate. Their
value may be sensitive to a range of characteristics unique to each
asset and key sources of estimation uncertainty include proved
reserve estimates, future cash flow expected to arise from the
cash-generating unit and a suitable discount rate.
In performing impairment reviews, the Group assesses the
recoverable amount of its operating assets principally with
reference to the Group's independent competent person's report,
estimates of future oil prices, operating costs, capital
expenditure necessary to extract those reserves and the discount
rate to be applied to such revenues and costs for the purpose of
deriving a recoverable value.
As detailed in note 11 and 12, the carrying amount of the
Group's oil production assets and E&E assets at 30 September
2020 were approximately GBP6.406million (2019: GBP6.416 million)
and GBP8.183million (2019: GBP5.878 million) respectively.
Management have impaired the oil production assets by GBP0.3
million based on operator market revaluation.
The methods, key assumptions, sensitivity and possible outcomes
in relation to the calculation of the estimates are detailed in
note 11.
(b) Going concern
While there can be no certainty the local authority will grant
the planning permission to the fields as described in the Strategic
Report. After making the enquiries, the Directors have a reasonable
expectation that the positive outcomes of these decision will be
achieved. For this reason, the Group and the Company continue to
adopt the going concern basis in preparing the financial
statements.
As disclosed in note 3.3, the directors consider the Group and
the Company to be a going concern while the Group will continue to
operate under the management's plan and the Group expects to be
able to continue to meet all finance obligations as they fall due
for at least next twelve months from the date of approval these
financial statements.
Key accounting estimates
(c) Decommissioning costs
Decommissioning costs will be incurred by the Group at the end
of the operating life of some of the Group's facilities and
properties. The Group assesses its decommissioning provision at
each reporting date. The ultimate decommissioning costs are
uncertain and cost estimates can vary in response to many factors,
including changes to relevant legal requirements, the emergence of
new restoration techniques or experience at other production sites.
The expected timing, extent and amount of expenditure may also
change - for example, in response to changes in reserves or changes
in laws and regulations or their interpretation. Therefore,
significant estimates and assumptions are made in determining the
provision for decommissioning. As a result, there could be
significant adjustments to the provisions established which would
affect future financial results.
External valuers may be used to assist with the assessment of
future decommissioning costs. The involvement of external valuers
is determined on a case by case basis, taking into account factors
such as the expected
gross cost or timing of abandonment, and is approved by the
directors. Selection criteria include market knowledge, reputation,
independence and whether professional standards are maintained.
As detailed in note 20, the provision at reporting date
represents management's best estimate of the present value of the
future decommissioning costs required.
5. Revenue and segment information
Currently, the Group's principal revenue is derived from the
sale of oil. All revenue arose from continuing operations within
the United Kingdom. Therefore, management considers no detail of
operating and geographical segments information is to be reported.
Nonetheless, the Group's revenue can be classified into the
following streams:
2020 2019
GBP'000 GBP'000
Sale of oil 68 200
======================================= =======================================
All the non-current assets of the Group are located in the
United Kingdom. All revenue arising from sale of oil is derived
from a single customer.
6. Operating loss
Operating loss is stated after charging/(crediting):
2020 2019
GBP'000 GBP'000
Depreciation of owned assets 147 36
Net loss on foreign currency
translation 2 3
Operating lease payments - 180
Employee benefit expense 1,091 1,309
Auditor's remuneration
Fees payable to company's
auditor in
respect to the audit of the
Parent Company
and consolidated financial
statements 40 40
Non audit fees payable to
company's auditor
relating to the tax advisory
services - -
--------------------------------------- ---------------------------------------
40 40
--------------------------------------- ---------------------------------------
7. Finance income and finance cost
2020 2019
GBP'000 GBP'000
Finance income
Interest received on
directors'
loan - 7
======================================= =======================================
2020 2019
GBP'000 GBP'000
Finance costs
Interest payable on
convertible
loan notes 25 -
Lease costs 7 -
--------------------------------------- ---------------------------------------
32 -
======================================= =======================================
8. Employee benefit expense
2020 2019
GBP'000 GBP'000
Wages and salaries 981 1,193
Social security costs 110 116
--------------------------------------- ---------------------------------------
1,091 1,309
======================================= =======================================
The directors received salary from the group totaling GBP415,000
(2019: GBP690,000).
Key managements are considered to be the directors. Details of
each director's emoluments are in the directors' remuneration
report.
2020 2019
Number Number
The average number of employees
during
the year was:
Director 5 5
Management 6 6
======================================= =======================================
11 11
======================================= =======================================
9. Taxation on ordinary activities
No liability to corporation tax arose for the years ended 30
September 2020 and 2019, as a result of underlying losses brought
forward.
Reconciliation of effective tax rate
2020 2019
GBP'000 GBP'000
Loss before tax (2,516) (5,043)
Tax at the UK Corporation tax
rate of 19% (2019: 19%) (478) (958)
Expenses not deductible for
tax purposes 75 248
Unrecognised deferred tax 403 710
--------------------------------------- ---------------------------------------
- -
======================================= =======================================
The Group has incurred indefinitely available tax losses of
GBP19,678,919 (2019: GBP18,533,000) to carry forward against future
taxable income of the subsidiaries in which the losses arose and
they cannot be used to offset taxable profits elsewhere in the
Group. In addition, there is approximately GBP6,000 (2019:
GBP147,000) of deductible temporary difference in respect of the
share-based payment.
No deferred tax asset was recognised in respect to these
accumulated tax losses and the decommissioning provisions as there
is insufficient evidence that the amount will be recovered in
future years.
10. Property, plant and equipment
Plant and Motor vehicles Fixtures Total
machinery and fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost or
valuation
At 1 October
2018 21 35 8 64
Additions - - - -
--------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
At 30
September
2019 21 35 8 64
Additions 3 - - 3
--------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
At 30
September
2020 24 35 8 67
--------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
Depreciation
and
impairment
At 1 October
2018 8 28 8 44
Charge for
the year 3 3 - 6
--------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
At 30
September
2019 11 31 8 50
Charge for
the year 3 2 - 5
--------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
At 30
September
2020 14 33 8 55
--------------------------------------- --------------------------------------- --------------------------------------- ---------------------------------------
Net book
value
At 30
September
2019 10 4 - 14
======================================= ======================================= ======================================= =======================================
At 30
September
2020 10 2 - 12
======================================= ======================================= ======================================= =======================================
Depreciation of property, plant and equipment is included in
administrative expenses in the consolidated statement of
comprehensive income.
11. Oil and gas production assets
Total
GBP'000
Cost or valuation
At 1 October 2018 5,252
Additions 2,121
---------------------------------------
At 30 September 2019 7,373
Additions -
---------------------------------------
At 30 September 2020 7,373
---------------------------------------
Depreciation and impairment
At 1 October 2018 27
Depreciation charge for the year 30
Impairment charge for the year 900
---------------------------------------
At 30 September 2019 957
Depreciation charge for the year 10
Impairment charge for the year -
---------------------------------------
At 30 September 2020 967
---------------------------------------
Net book value
At 30 September 2019 6,416
=======================================
At 30 September 2020 6,406
=======================================
Depreciation of oil production assets is included in cost of
sales in the consolidated statement of comprehensive income. During
the year, the Group incurred further development costs of approx.
GBPnil (2019: GBP1.65 million) at both operating fields.
In April 2019, the Group acquired an additional 20% interest in
the Lidsey field for a consideration of GBP467,377 by issuing
8,324,024 new shares at 5.6148p each.
As at 30 September 2020, the Group retained an 80% interest in
Lidsey field and 65% in Brockham field and is still the operator of
both fields.
In assessing whether an impairment is required, the carrying
value of the asset or cash generating unit ("CGU") is compared with
its recoverable amount. The recoverable amount is determined from
value in use calculations based on cash flow projections from
revenue and expenditure forecasts covering a 5 year period.
Assumptions involved in impairment measurement include estimates of
commercial reserves and production volumes, future crude oil
prices, discount rates and the level and timing of expenditures,
all of which are inherently uncertain. The key assumptions used are
as follow:
2020 2019
Discount rate 10% 10%
Crude oil price (per barrels) $50 $63
The growth rate is assumed to be zero and the level of
production is constant on the basis the production plant is assumed
to be at the most efficient capacity over the period of
extraction.
Commercial reserves are proven and probable ("2P") oil and gas
reserves, calculated on an entitlement basis. Estimates of
commercial reserves underpin the calculation of depletion and
amortisation on a Unit of Production ("UOP") basis. Estimates of
commercial reserves include estimates of the amount of oil and gas
in place, assumptions about reservoir performance over the life of
the field and assumptions about commercial factors which, in turn,
will be affected by the future oil and gas price.
Annual estimates of oil and gas reserves are generated
internally by the Group with external input from operator profiles
and/or a Competent Person. These are reported annually to the
Board. The self-certified estimated future production profiles are
used in the life of the fields which in turn are used as a basis in
the value-in-use calculation.
The discount rate is based on the specific circumstances of the
Group and its operating segments and is derived from its Weighted
Average Cost of Capital ("WACC"), with appropriate adjustments made
to reflect the risks specific to the CGU and to determine the
pre-tax rate. In considering the discount rates applying to the
CGUs, the directors have considered the relative sizes, risks and
the inter-dependencies of its CGUs. No reasonably possible change
in a key assumption would produce a significant movement in the
carrying value of the CGUs and therefore no sensitivity analysis is
presented.
Furthermore, a sensitivity analysis has been carried out for
Brockham and Lidsey oil fields and the results of the analysis can
be summarised as follow:
-- If the estimated crude oil price had been 10 percentage point
lower than the basis assumption, total recoverable amount would be
1% lower.
-- If the estimated discount rate used for the Group's discount
cash flow had been one percentage point higher than the starting
assumption of 10%, total recoverable amount would be 3% lower.
12. Exploration and evaluation assets
Total
GBP'000
Cost or valuation
At 1 October 2018 5,218
Additions 660
Decommissioning cost -
---------------------------------------
At 1 October 2019 5,878
Additions 2,605
Impairment charge (300)
---------------------------------------
At 30 September 2020 8,183
================================
On 19 June 2019, the Group acquired 51% of the Saltfleetby Gas
Field for GBPnil consideration receiving a cash contribution of
GBP2.5m from the vendor in relation to the site restoration costs
and the abandonment costs if commercial rates are not
available.
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence
(Holmwood/A24 Prospect) in which Angus had an interest of 12.5%,
announced that a detailed study examining the viability of drilling
the A24 (formerly Holmwood) Portland prospect's center from
selected sites outside the Surrey Hills Area of Outstanding Natural
Beauty, each over 3 km from the target, concludes that the required
long-reach/shallow target-depth wells are neither technically
viable or economically feasible. Consequently, UKOG and its
partners have now relinquished their interests in the licence. This
was a decision supported by the Company and as such the asset has
been fully impaired.
In performing impairment review, the Group assessed the economic
value of individual exploration and evaluation (E&E) assets and
had considered no indication for impairment to these E&E
assets. In respect of Balcombe the
Directors have considered the likelihood of a successful appeal. See note 26 for further details.
13. Subsidiaries
The details of the subsidiary are as follows:
Effective equity
Name of subsidiary/ place interest held
of incorporation Principal activity by the Group
2020 2019
Investment holding
Angus Energy Holdings UK Limited company 100% 100%
Angus Energy Weald Basin No.1 Investment holding
Limited company 100% 100%
Angus Energy Weald Basin No.2 Investment holding
Limited company 100% 100%
Oil extraction for
Angus Energy Weald Basin No.3 distribution to third
Limited* parties 100% 100%
Angus Energy North America
Limited Dormant company 80% 80%
*indirect wholly owned by Angus Energy Weald Basin No.2 Limited
(AEWB2).
The registered office address of the respective entity as
follow:
Registered address Name of subsidiary
Building 3 Chiswick Park, Angus Energy Weald Basin No.2
566 Chiswick High Road, London, Limited
W4 5YA. Angus Energy North America Limited
Westpoint 4 Redheughs Rigg, Angus Energy Holdings UK Limited
South Gyle Edinburgh, Scotland, Angus Energy Weald Basin No.1
EH12 9DQ Limited
Angus Energy Weald Basin No.3
Limited
14. Trade and other receivables
2020 2019
GBP'000 GBP'000
Amounts due from farmees 272 296
Amount owed by a related
party - 216
Rent deposit 29 -
VAT recoverable 201 90
Accrued income - 57
Other receivables 107 135
--------------------------------------- ---------------------------------------
609 794
======================================= =======================================
The carrying amount of trade and other receivables approximates
to their fair value.
2020 2019
GBP'000 GBP'000
Trade and other receivables 872 1,196
Less: Impairment allowance (263) (402)
--------------------------------------- ---------------------------------------
609 794
--------------------------------------- ---------------------------------------
The Group is in discussions to recover the full amount due from
farmees. The Group has made an allowance for impairment to reflect
the potential uncertainty over the recovery of these amounts.
15. Share capital
Allotted, called up and fully paid:
Number of Ordinary
shares share capital Share premium
Ordinary
share of
GBP0.002
each GBP'000 GBP'000
As at 30
September
2018 381,721,985 481 5,753
Issue of
shares 22
November
2018 22,222,222 44 1,956
Issue of
shares 15
February
2019 55,000,000 110 2,090
Issue of
shares 18
April
2019 8,324,024 17 450
Issue of
shares 30
April
2019 70,824,700 142 2,868
Issue of
shares 25
May 2019 735,076 2 30
Issue of
shares 17
July 2019 2,000,000 4 56
Less:
Issuance
of costs - - (475)
======================================= ======================================= =====================================
At 30
September
2019 540,828,007 1,082 21,117
Issue of
shares 12
December
2019 13,766,520 27 72
Issue of
shares 18
February
2020 17,319,016 35 65
Issue of
shares 5
March
2020 32,133,676 64 136
Issue of
shares 29
September
2020 111,111,105 222 778
Less:
Issuance
of costs - - (186)
======================================= ======================================= =====================================
At 30
September
2020 715,158,324 1,430 21,982
On 12 December 2019, the company issued 13,766,520 shares at
0.7264p each. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note
described in note 21.
On 18 February 2020, the company issued 17,319,016 shares at
0.5774p each. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note
described in note 21.
On 15 March 2020, the company issued 32,133,676 shares at a
price 0.6224p. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note
described in note 21.
On 29 September 2020, the company issued 111,111,105 shares at
0.9p per share, raising gross proceed of GBP1,000,000.
16. Share-based payments
In 2016, the Group implemented an Enterprise Management
Incentive Scheme followed by a NED and Consultant Share Option
Scheme (The Scheme).
At 30 September 2020, the following share options and warrants
were outstanding in respect of the Ordinary shares:
No. of
options
Granted during surrendered Exercised Outstanding
Exercise Outstanding the year or during and Final expiry
price as at 01 cancelled the year exercisable dates
Oct 2019 during the as at 30
year September
2020
GBP0.06 17,818,304 - - - 17,818,304 13 Nov 2026
GBP0.09 1,050,000 - - - 1,050,000 13 Nov 2026
GBP0.10 5,000,000 - (5,000,000) - - 23 Apr 2020
GBP0.068 2,469,914 - - - 2,469,914 15 Feb 2022
GBP0.08 10,650,000 - - - 10,650,000 24 Aug 2028
GBP0.02 23,900,000 - - - 23,900,000 15 Jul 2029
GBP0.01663 18,025,597 - - 18,025,597 24 Oct 2022
GBP0.01 - 15,000,000 - - 15,000,000 17 Apr 2023
GBP0.009 - 5,555,555 - - 5,555,555 29 Sep 2023
------------ --------------- ---------------- -------------------- ------------ ---------------- ---------------
Warrant 7,469,914 38,581,152 (5,000,000) - 41,051,066
Share
options 53,418,304 - - - 53,418,304
------------ --------------- ---------------- -------------------- ------------ ---------------- ---------------
The weighted average exercise price of share options and
warrants was GBP0.0334 at 30 September 2020 (2019:
GBP0.0519). The weighted average remaining contractual life of
options outstanding at the end of the year was 5 years (2019: 8
years). The weighted average fair value of the warrants was
GBP0.0118 (2019: GBP0.0013) each on the grant date. The vesting
criteria of the share options are subject to share price growth
reaching to the target level. All the vesting conditions were met
during the year and the options were fully vested.
These fair values were calculated using the Black Scholes
warrant pricing model. The inputs into the model were as
follows:
Warrants Warrants Warrants
Stock price 0.83p 0.83p 0.83p
Exercise price 1.6643p 1p 0.9p
Interest rate 0.5% 0.5% 0.5%
Volatility 30% 30% 30%
Time to maturity 3 years 3 years 3 years
The Group recognised a share-based payment charge of
approximately GBP30,000 (2019: GBP79,000).
No options or warrants were exercised in both the 2019 and 2020
reporting year. There remain 53,418,304 options and 41,051,066
warrants outstanding and exercisable as at 30 September 2020.
17. Reserves
2020 2019
GBP'000 GBP'000
Merger reserve (200) (200)
Merger reserve
The merger reserve arose on the acquisition of Angus Energy
Holdings Limited by the Company .
18. Earnings per share (EPS)
Basic EPS amounts are calculated by dividing the profit or loss
for the year attributable to equity holders of the Group by the
weighted average number of ordinary shares outstanding during the
period
Diluted EPS amounts are calculated by dividing the profit or
loss for the year attributable to equity holders of the Group by
the weighted average number of ordinary shares outstanding during
the period plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.
The earnings per share information based upon the 715,158,324
ordinary shares are as follows:
2020 2019
GBP'000 GBP'000
Net loss attributable to equity
holders of the parent company (2,516) (5,043)
======================================= =======================================
Weighted average number of basic
ordinary shares 580,889,428 466,441,729
======================================= =======================================
Basic EPS (in pence) (0.43) (1.08)
======================================= =======================================
The diluted loss per share was not applicable as there were no
dilutive potential ordinary shares outstanding at the end of the
reporting period.
19. Trade and other payables
Due within one year 2020 2019
GBP'000 GBP'000
Trade payables 1,168 678
Convertible loan note 58 -
Other taxation 170 135
VAT payable - 185
Lease liabilities 24 -
Accruals 60 30
Other payables 8 3
--------------------------------------- ---------------------------------------
1,488 1,031
======================================= =======================================
19. Trade and other payables (continued)
Due after more than 2020 2019
one year
GBP'000 GBP'000
Convertible loan note 1,319 -
Lease liabilities 11 -
--------------------------------------- ---------------------------------------
1,330 -
======================================= =======================================
The carrying amount of trade and other payables approximates to
their fair value.
On 20 April 2020, the Company issued a 4% per annum GBP1,400,000
Convertible Loan Note (the "New Loan Note") to Knowe Properties
Limited, a significant shareholder in the Company. The New Loan
Note is unsecured and is convertible at maturity after two years at
the lower of (a) GBP0.01; or (b) if there is an issue of Shares or
options in respect of Shares (excluding options granted to
directors, managers or employees) by way of a single or directly
related offer to the public with an aggregate subscription amount
of GBP250,000 or more made without the prior written approval of
the Noteholder then the price attaching to the lowest of those
issues.
The equity element of the convertible loan note recognised is
GBP106,000.
Alternatively, and at the Company's option, the Loan Note is
repayable in part or whole at any time up to two months before
maturity with an accompanying grant of warrants equal to the face
value of the amount repaid. The warrants are exercisable at the
lower of 1.3 pence or a 30% premium to the Conversion Price.
Additionally, the Company has undertaken not to issue options to
directors or staff at an exercise price below GBP0.01 during the
term of the New Loan Note.
20. Provisions for other liabilities and charges
2020 2019
GBP'000 GBP'000
Abandonment costs
Balance b/fwd 3,052 552
Addition - 2,500
Abandonment cost incurred (45) -
--------------------------------------- ---------------------------------------
Balance b/cwd 3,007 3,052
--------------------------------------- ---------------------------------------
The Group makes full provision for the future costs of
decommissioning oil production facilities and pipelines on the
installation of those facilities. The amount provision is expected
to be incurred up to 2029 when the producing oil and gas properties
are expected to cease operations.
These provisions have been created based on the Group's internal
estimates and expectation of the decommissioning costs likely to
incur in the future. For the period under review, the directors
have assessed that the discount rate and inflation rate to be
applied to the current cost of decommissioning to be similar. On
this basis, the current cost is considered to be similar to the
discounted net present value.
As described in note 12, the additional provision was relating
to the acquisition of Saltfleetby gas field during the year.
21. Convertible loan
On 25 October 2019, the Company entered into GBP1.5 million
Convertible Loan Note facility led by Riverfort Global
Opportunities PCC Limited of which GBP1m was drawn down
immediately.
The equity element of the convertible loan note was not
recognised as the amount was not considered material.
On 12 December 2019, the company issued 13,766,520 shares at
0.7264p each. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note.
On 18 February 2020, the company issued 17,319,016 shares at
0.5774p each. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note.
On 15 March 2020, the company issued 32,133,676 shares at a
price 0.6224p. These were loan reduction shares relating to the
Riverfort Global Opportunities PCC Limited convertible note.
During the period, a further GBP542,000 of the Convertible Loan
Note was repaid in cash leaving a balance of
GBP58,000 at the end of the period which was subsequently
converted in ordinary shares as detailed in note 26.
On 20 April 2020, the Company issued a 4% per annum GBP1,400,000
Convertible Loan Note (the "New Loan Note") to Knowe Properties
Limited, a significant shareholder in the Company. The New Loan
Note is unsecured and is convertible at maturity after two years at
the lower of (a) GBP0.01; or (b) if there is an issue of Shares or
options in respect of Shares (excluding options granted to
directors, managers or employees) by way of a single or directly
related offer to the public with an aggregate subscription amount
of GBP250,000 or more made without the prior written approval of
the Noteholder then the price attaching to the lowest of those
issues. The equity element of the convertible loan note recognised
is GBP106,000.
Alternatively, and at the Company's option, the Loan Note is
repayable in part or whole at any time up to two months before
maturity with an accompanying grant of warrants equal to the face
value of the amount repaid. The warrants are exercisable at the
lower of 1.3 pence or a 30% premium to the Conversion Price.
Additionally, the Company has undertaken not to issue options to
directors or staff at an exercise price below GBP0.01 during the
term of the New Loan Note.
22. Financial instruments
The Group's principal financial instruments comprise cash and
cash equivalents, trade and other receivables and trade and other
payable. The Group's accounting policies and method adopted,
including the criteria for recognition, the basis on which income
and expenses are recognised in respect of each class of financial
assets, financial liability and equity instrument are set out in
Note 3. The Group do not use financial instruments for speculative
purposes.
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
2020 2019
GBP'000 GBP'000
Financial assets measured at
amortised
cost
Loans and receivables
Trade and other receivables 609 611
Cash and cash equivalents 1,852 3,419
--------------------------------------- ---------------------------------------
Total financial assets 2,461 4,030
======================================= =======================================
Financial liabilities measured at
amortised
cost
Trade and other payables 1,406 1,031
Convertible loan notes 1,377 -
Lease liabilities 35 -
--------------------------------------- ---------------------------------------
Total financial liabilities 2,818 1,031
======================================= =======================================
22. Financial instruments (continued)
Capital management
The Group manages its capital to ensure that it will be able to
continue as a going concern while attempting to maximise the return
to stakeholders through the optimisation of the debt and equity
balance. The capital structure of the group consists of issued
capital and external loans.
Credit risk
Credit risk is the risk that a counter-party will cause a
financial loss to the Group by failing to discharge its obligations
to the Group. The Group manages its exposure to this risk by
applying limits to the amount of credit exposure to any one
counterparty and employs strict minimum credit worthiness criteria
as to the choice of counterparty. The maximum exposure to credit
risk for receivables and other financial assets is represented by
their carrying amount. As described in note 14, the Group
recognised an impairment provision of GBP263,000 against the amount
due from farmees that are past due in the year.
Fair values
Management assessed that the fair values of cash and short-term
deposits, trade receivables, trade payables and other current
liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments.
Interest rate risk
The Group and company's policy is to fund its operations through
the use of retained earnings and equity.
The Group exposure to changes in interest rates relates
primarily to cash at bank and amount owed by a related party. Cash
is held either on current or short term deposits at a floating rate
of interest determined by the relevant bank's prevailing base
rate.
Foreign currency exchange risks
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of the changes in
foreign exchange rates. The Group's exposure to the risk of changes
in foreign exchange rates relates primarily to the Group's
operating activities (when revenue or expense is denominated in a
foreign currency and the Group's net investments in foreign
subsidiaries.
The Group does not hedge its foreign currencies. Transactions
with customers are mainly denominated in US Dollars. The Group has
bank accounts in US Dollars to mitigate against the exchange risks.
At 30 September 2020, the GBP cash balance held denominated in USD
was GBP81,000 (2019; GBP36,000).
Liquidity risks
The principal risk to the Group is liquidity, which arises from
the Group's management of working capital. It is a risk that the
Group will encounter difficulty in meeting its financial
obligations as they fall due. This aspect is kept under review by
the directors and in this respect management carries out rolling 12
month cash flow projections on a monthly basis as well as
information regarding cash balances. It is the Group's policy as
regards liquidity to ensure sufficient cash resources are
maintained to meet short-term liabilities.
The maturity profile of the Group's financial liabilities at the
reporting dates based on contractual undiscounted payments are
summarised below:
2020 2019
GBP'000 GBP'000
Trade and other payable
Within one month 1,404 1,031
Within two to three months 60 -
--------------------------------------- ---------------------------------------
1,464 1,031
======================================= =======================================
22. Financial instruments (continued)
2020 2019
GBP'000 GBP'000
Lease liabilities
Within one month 2 -
Within two to three months 4 -
Within four to six months 6 -
Within six to twelve months 12 -
More than twelve months 11 -
--------------------------------------- ---------------------------------------
35 -
======================================= =======================================
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing
market commodity prices of oil products it produces. The table
below summarises the impact on profit before tax for changes in
commodity prices
Commodity price sensitivity
The analysis is based on the assumption that the crude oil price
moves 10% resulting in a change of US$5/bbl in 2020 (2019:
US$6.61/bbl), with all other variables held constant. Reasonably
possible movements in commodity prices were determined based on a
review of the average spot prices at each reporting periods.
Increase / (decrease)
Increase/decrease in crude in profit
oil before tax for the
prices year ended
30 September
2020 2019
GBP'000 GBP'000
Average spot price increased
by 10% 7 20
--------------------------------------- ---------------------------------------
Average spot price decreased
by 10% (7) (20)
--------------------------------------- ---------------------------------------
23. Related party transactions
Transaction with related party
The advance loan made to the former director Mr Jonathan
Tidswell-Pretorius was unsecured with repayment on demand. During
the year under review, the Group charged approximately 3% interest
annually on the advance loan to the director of GBP7,000 (2018:
GBP6,000). This can be analysed at below table:
2020 2019
GBP'000 GBP'000
Opening balance 216 209
* Amount repaid (216) -
* Accrued interest on loan - 7
--------------------------------------- ---------------------------------------
Closing balance - 216
======================================= =======================================
On 6 January 2020, Mr Jonathan Tidswell repaid the outstanding
amount in full.
24. Net debts reconciliation
The below table sets out an analysis of net debt and the
movement in net debt for the years presented
2020 2019
GBP'000 GBP'000
Cash and cash equivalent 1,852 3,419
Convertible loan note (note
21) (1,377) -
--------------------------------------- ---------------------------------------
Net debt 475 3,419
======================================= =======================================
Cash and Convertible Total
cash equivalents loan note
GBP'000 GBP'000 GBP'000
Net cash as at
1 October 2018 846 - 846
Cash flow (4,641) - (4,641)
Issue of new
equity (net
proceeds) 7,214 - 7,214
--------------------------------------- --------------------------------------- ---------------------------------------
Net debt as at
1 October 2019 3,419 - 3,419
Cash flow (4,238) - (4,238)
Issue of new
equity (net
proceeds) 813 - 813
Issue of
convertible
loan note 2,400 (2,294) 106
Conversion of
loan note to
equity - 400 400
Repayment of
convertible
loan
note (542) 542 -
Interest on
convertible
loan
note - (25) (25)
--------------------------------------- --------------------------------------- ---------------------------------------
Net debt 1,852 (1,377) 475
======================================= ======================================= =======================================
25. Lease assets and liabilities
The Groups lease assets are offices. Leases to explore for or
use minerals, oil, natural gas and similar non-regenerative
resources are outside the scope of IFRS 16 and therefore the leases
that the Group have for the various sites are outside the scope
given these leases are wholly for the purposes of exploration and
extraction from the leased land only. Key movements relating to the
lease balances are presented below
GBP'000
2020 Leased assets
Balance as at 1 October 2019 166
Additions to leased assets -
Depreciation charged (131)
---------------------------------------
Balance at 30 September 2020 35
=======================================
25. Lease assets and liabilities (continued)
GBP'000
2019 Leased liability restated
Operating lease commitment disclosed
as at 30 Sept 2019 508
-------------------------------------
Discounted using incremental borrowing
rate at the date of
initial application 423
Less leases not recognised as a
liability (257)
---------------------------------------
Lease liability recognised as at
1 October 2019 166
=======================================
Of which are:
Current lease liabilities 132
Non-current lease liabilities 34
---------------------------------------
166
=======================================
The maturity of the lease liability is as follows:
As at 30 September
2020 2019
GBP'000 GBP'000
Leases which expire:
Not later than one year 24 88
Later than one year and not
later
than five years 11 191
More than five years - 35
--------------------------------------- ---------------------------------------
Total 35 314
======================================= =======================================
26. Subsequent events
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence
(Holmwood/A24 Prospect) in which Angus had an interest of 12.5%,
announced that "a detailed study examining the viability of
drilling the A24 (formerly Holmwood) Portland prospect's center
from selected sites outside the Surrey Hills Area of Outstanding
Natural Beauty, each over 3 km from the target, concludes that the
required long-reach/shallow target-depth wells are neither
technically viable or economically feasible. Consequently, UKOG and
its partners have now relinquished their interests in the licence.
It remains a great disappointment to the Company that the licence's
former operator, Europa Oil and Gas, whilst in possession of
planning consent, failed to drill the prospect from the Holmwood
site, around 1 km from the target." This was a decision supported
by the Company.
On 21 October 2020, the Company executed a Sale & Purchase
Agreement for the purchase of Doriemus plc's ("Doriemus") 10%
interest in the Brockham PL235 Licence, thereby increasing the
Company's interest from 65% to 75%. The purchase price for the
Licence is adjusted for the settlement of outstanding amounts due
from Doriemus to the Company and a contribution towards the
estimated share of long-term abandonment liabilities and results in
a net payment to the Company of approximately GBP260,000 in cash in
Completion.
On 4 November 2020, the Company announced that, in relation to
the GBP1.5 million convertible loan facility announced on 25
October 2019 (the "Loan") and amended on 20 April 2020, it received
a notice from Riverfort Global Opportunities PCC Limited and YA II
PN Ltd ("Investors") to convert the final GBP58,335 of the Loan
into Angus shares. After the conversion there were no outstanding
liabilities between the Company and the Noteholders. The Company
had therefore allotted 9,678,945 new ordinary shares to the
noteholders.
26. Subsequent events (continued)
On 30 November 2020, the Company together with its partner,
Saltfleetby Energy Limited ("SEL"), it had entered into a
Memorandum of Understanding (the "MOU") with Aleph Energy Limited
and Aleph Commodities Limited ("Aleph") detailing non-binding Heads
of Terms to provide up to GBP12 million towards the Saltfleetby
Finance Facility required to develop the Saltfleetby Gas Field
("Saltfleeby"). The indicative terms provide for a four year
amortising loan facility of up to GBP12million with a 12% margin
over LIBOR, a 3% commitment fee payable out of the facility, a
share grant of 30 million shares in Angus, issued over the life of
the facility and an override of 8% on gross revenue following
repayment of the facility. Given the share grant to be issued by
Angus under the MOU, SEL has agreed net drawdowns from the facility
to cover elements of the pipeline completion, thereby keeping the
relative funding liabilities on the agreed pro rata basis of
51%/49%.
On 16 December 2020, the company raised gross proceeds of
GBP249,990 as result of a placing of new ordinary shares. A total
of 41,664,999 new ordinary shares in the capital of the Company
have been placed by WH Ireland Limited with new and existing
investors at a price of 0.6 pence per share.
On 27 January 2021, the company raised gross proceeds of
GBP1,5000,000 as result of a placing of new ordinary shares. A
total of 150,000,000 new ordinary shares in the capital of the
Company have been placed by WH Ireland Limited with new and
existing investors at a price of 1 pence per share. The Placing
Shares were also accompanied by the issue of one warrant to
subscribe for one ordinary share in the Company for each Placing
Share (the "Placing Warrant"). The Placing Warrants are exercisable
at any time, for a period of 2 years, from the date of Admission at
the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at
1.5p.
On 1 February 2021, to satisfy additional demand, the company
conditionally placed a further 15,000,000 new ordinary shares in
the Company at a price of 1 pence per share to raise gross proceeds
of GBP150,000. The Further Placing Shares were also accompanied by
the issue of one warrant to subscribe for one ordinary share in the
Company for each Further Placing Share (the "Further Placing
Warrants"). When issued, the Further Placing Warrants will be
exercisable at any time, for a period of 2 years, from the date of
admission of the Further Placing Shares at the following exercise
prices: 50% at 1.2p; 25% at 1.35p and 25% at 1.5p.
On 2 March 2021, West Sussex County Council's Planning Committee
rejected the Company's planning application for an Extended Well
Test at Balcombe. The Company is presently evaluating all of the
options available with its partners to appeal this decision.
2020 2019
Note GBP'000 GBP'000
ASSETS
Non-current assets
Investment 5 12,830 12,440
---------
Total non-current assets 12,830 12,440
--------- ---------
Current assets
Trade and other receivables 6 174 360
Cash and cash equivalents 1,531 239
--------- ---------
Total current assets 1,705 599
--------- ---------
TOTAL ASSETS 14,535 13,039
========= =========
EQUITY
Equity attributable to owners of the parent:
Share capital 8 1,430 1,082
Share premium 8 21,982 21,117
Merger relief reserve 1,500 1,500
Loan note reserve 106 -
Accumulated loss (12,182) (10,876)
TOTAL EQUITY 12,836 12,823
========= =========
Current liabilities
Trade and other payables 7 380 216
---------
Total current liabilities 380 216
--------- ---------
Non-Current liabilities
Trade and other payables 7 1,319
--------- ---------
Total non-current liabilities 1,319
--------- ---------
TOTAL LIABILITIES 1,699 216
========= =========
TOTAL EQUITY AND LIABILITIES 14,535 13,039
========= =========
The loss for the Company for the year ended 30 September 2020
was GBP1,336,000 (2019: GBP8,414,000)
The note on page 72 to 75 form part of these of financial
statements
The financial statements were approved by the Board of Directors
and authorized for issue on and were signed on its behalf by:
George Lucan - Director
Company number: 09616076
Merger
Share Share relief Loan note Accumulated Total
capital premium reserve reserve loss equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------------- -------------- ----------- ---------------- --------------
Balance at 1
October
2018 763 14,142 1,500 - (2,541) 13,864
Loss for the
year - - - - (8,414) (8,414)
------------- ------------------- -------------- ----------- ---------------- --------------
Total
comprehensive
income
for the year - - - - (8,414) (8,414)
------------- ------------------- -------------- ----------- ---------------- --------------
Transaction
with owners
Issue of shares 319 7,450 - - - 7,769
Less: issuance
costs - (475) - - - (475)
Granted of share
options - - - - 79 79
------------- ------------------- -------------- ----------- ---------------- --------------
Balance at 30
September
2019 1,082 21,117 1,500 - (10,876) 12,823
Loss for the
year - - - - (1,336) (1,336)
------------- ------------------- -------------- ----------- ---------------- --------------
Total
comprehensive
income -
for the year - - - - (1,336) (1,336)
------------- ------------------- -------------- ----------- ---------------- --------------
Transaction
with owners
Issue of shares 348 1,051 - - - 1,399
Less: issuance
costs - (186) - - - (186)
Issue of
convertible
loan note - - - 106 - 106
Granted of share
options - - - - 30 30
------------- ------------------- -------------- ----------- ---------------- --------------
Balance at 30
September
2020 1,430 21,982 1,500 106 (12,182) 12,836
------------- ------------------- -------------- ----------- ---------------- --------------
Share capital comprises the ordinary issued share capital of the
company.
Share premium comprises of the excess above the nominal value of
the new ordinary shares issued during the period.
The merger relief reserve represents the difference between the
cost of the investment in Angus Energy Holding UK Limited
(initially measured at fair value) and the nominal value of the
shares transferred as consideration.
Retained earnings represent the aggregate retained earnings of
the company.
The note on page 72 to 75 form part of these of financial
statements.
1. General information
The company was incorporated in England and Wales on 1 June 2015
as a private limited company. Its registered office is located at
Building 3, Chiswick Park, 566 Chiswick High Street, London, W4,
5YA.
The financial information of the company is presented in British
Pounds Sterling ("GBP") and rounded into thousand (GBP'000).
2. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
the historical cost convention as modified by the revaluation of
certain fixed assets. The financial statements have been prepared
in accordance with FRS 102 - The Financial Reporting Standard
applicable in the UK and Republic of Ireland and the Companies Act
2006. The principal accounting policies are described below. They
have all been applied consistently throughout the period.
The company meets the definition of a qualifying entity under
FRS 102 and has therefore taken advantage of the disclosure
exemptions available to it in respect of its separate financial
statements, which are presented alongside the consolidated
financial statements. Exemptions have been taken in relation to
financial instruments, presentation of a cash flow statement and
remuneration of key management personnel.
Investment
Investments in subsidiaries are stated at cost less provision
for impairment. Where merger relief is applicable, the cost of the
investment is recorded at the fair value on the date of the
transaction. The difference between the fair value of the
investment and the nominal value of the shares (plus the fair value
of any other consideration given) is shown as a merger relief
reserve and no share premium is recognized
Cash and cash equivalents
Cash in the statement of financial position is cash held on call
with banks.
Financial assets
The directors classify the company's financial assets held at
amortised cost less provisions for impairment. The directors
determine the classification of its financial assets at initial
recognition.
Creditors
Short term creditors are measured at the transaction price.
Other financial liabilities, including bank loans, are measured
initially at fair value, net of transaction costs, and are measured
subsequently at amortised cost using the effective interest
method.
Taxation
Tax is recognised in the Statement of comprehensive income,
except that a charge attributable to an item of income and expense
recognised as other comprehensive income or to an item recognised
directly in equity is also recognised in other comprehensive income
or directly in equity respectively.
The current income tax charge is calculated on the basis of tax
rates and laws that have been enacted or substantively enacted by
the reporting date in the countries where the Company operates and
generates income.
2. Accounting policies (continued)
Taxation (continued)
Deferred tax balances are recognised in respect of all timing
differences that have originated but not reversed by the Statement
of financial position date, except that:
-- The recognition of deferred tax assets is limited to the
extent that it is probable that they will be recovered against the
reversal of deferred tax liabilities or other future taxable
profits; and
-- Any deferred tax balances are reversed if and when all
conditions for retaining associated tax allowances have been
met.
Deferred tax balances are not recognised in respect of permanent
differences except in respect of business combinations, when
deferred tax is recognised on the differences between the fair
values of assets acquired and the future tax deductions available
for them and the differences between the fair values of liabilities
acquired and the amount that will be assessed for tax. Deferred tax
is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
3. Profit for the financial period
The Company has taken advantage of section 408 of the Companies
Act 2006 and, consequently, a profit and loss account for the
Company alone has not been presented. The Company's loss for the
financial period was approximately GBP1,336,000 (2019:
GBP8,414,000).
4. Staff costs
There are four employees (2019: four) and five directors (2019:
five) employed by the company. The directors are regarded as the
key management and their remunerations are disclosed in note 8 to
the consolidated financial statements.
5. Investment
Cost of Loan to
investment group undertakings Total
GBP'000 GBP'000 GBP'000
At 1 October
2018 2,028 10,990 13,018
Movement of
the
intercompany
loan for the
year - 5,722 5,722
Allowance for
impairment (1,800) (4,500) (6,300)
--------------------------------------- --------------------------------------- ---------------------------------------
At 30
September
2019 228 12,212 12,440
Movements of
the
intercompany
loan for the
year - 390 390
Allowance for
Impairment - - -
--------------------------------------- --------------------------------------- ---------------------------------------
At 30
September
2020 228 12,602 12,830
======================================= ======================================= =======================================
The details of the subsidiary are set out in the note 13 to the
consolidated financial statements .
The Company is required to assess the carrying values of each of
its investments in subsidiaries and loans to group undertakings for
impairment. To a large extent the oil & gas production assets
and exploration and evaluation assets have been funded by loans
from the Company is represented by the value of the operating
segment cash generating units. Recoverability of these loans is
therefore dependent upon the operating segments producing
sufficient cash surplus such that the segment achieves a positive
net asset position.
6. Trade and other receivables
2020 2019
GBP'000 GBP'000
Trade receivables 96 24
Directors accounts - 216
Vat recoverable 11 54
Other receivables 67 66
--------------------------------------- ---------------------------------------
174 360
======================================= =======================================
7. Trade and other payables
2020 2019
GBP'000 GBP'000
Trade payables 110 60
Amounts due to group
undertakings 100 100
Other taxation 46 24
Convertible loan note 58 -
Other payables 66 32
--------------------------------------- ---------------------------------------
380 216
======================================= =======================================
The carrying amount of trade and other payables approximates to
their fair value.
2020 2019
Due after more than one year GBP'000 GBP'000
Convertible loan note 1,319 -
--------------------------------------- ---------------------------------------
1,319 -
======================================= =======================================
8. Share capital
The movement of share capital is set out in the note 15 to the
consolidated financial statements .
As at 30 September 2020 the total issued ordinary shares of the
Company were 715,158,325 (2019 - 540,828,007).
9. Subsequent events
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence
(Holmwood/A24 Prospect) in which Angus had an interest of 12.5%,
announced that "a detailed study examining the viability of
drilling the A24 (formerly Holmwood) Portland prospect's centre
from selected sites outside the Surrey Hills Area of Outstanding
Natural Beauty, each over 3 km from the target, concludes that the
required long- reach/shallow target-depth wells are neither
technically viable or economically feasible. Consequently, UKOG and
its partners have now relinquished their interests in the licence.
It remains a great disappointment to the Company that the licence's
former operator, Europa Oil and Gas, whilst in possession of
planning consent, failed to drill the prospect from the Holmwood
site, around 1 km from the target." This was a decision supported
by the Company.
9. Subsequent events (continued)
On 21 October 2020, the Company executed a Sale & Purchase
Agreement for the purchase of Doriemus plc's ("Doriemus") 10%
interest in the Brockham PL235 Licence, thereby increasing the
Company's interest from 65% to 75%. The purchase price for the
Licence is adjusted for the settlement of outstanding amounts due
from Doriemus to the Company and a contribution towards the
estimated share of long-term abandonment liabilities and results in
a net payment to the Company of approximately GBP260,000 in cash in
Completion.
On 4 November 2020, the Company announced that, in relation to
the GBP1.5 million convertible loan facility announced on 25
October 2019 (the "Loan") and amended on 20 April 2020, it received
a notice from Riverfort Global Opportunities PCC Limited and YA II
PN Ltd ("Investors") to convert the final GBP58,335 of the Loan
into Angus shares. After the conversion there were no outstanding
liabilities between the Company and the Noteholders. The Company
had therefore allotted 9,678,945 new ordinary shares to the
noteholders.
On 30 November 2020, the Company together with its partner,
Saltfleetby Energy Limited ("SEL"), it had entered into a
Memorandum of Understanding (the "MOU") with Aleph Energy Limited
and Aleph Commodities Limited ("Aleph") detailing non-binding Heads
of Terms to provide up to GBP12 million towards the Saltfleetby
Finance Facility required to develop the Saltfleetby Gas Field
("Saltfleeby"). The indicative terms provide for a four year
amortising loan facility of up to GBP12million with a 12% margin
over LIBOR, a 3% commitment fee payable out of the facility, a
share grant of 30 million shares in Angus, issued over the life of
the facility and an override of 8% on gross revenue following
repayment of the facility. Given the share grant to be issued by
Angus under the MOU, SEL has agreed net drawdowns from the facility
to cover elements of the pipeline completion, thereby keeping the
relative funding liabilities on the agreed pro rata basis of
51%/49%.
On 16 December 2020, the company raised gross proceeds of
GBP249,990 as result of a placing of new ordinary shares. A total
of 41,664,999 new ordinary shares in the capital of the Company
have been placed by WH Ireland Limited with new and existing
investors at a price of 0.6 pence per share.
On 27 January 2021, the company raised gross proceeds of
GBP1,5000,000 as result of a placing of new ordinary shares. A
total of 150,000,000 new ordinary shares in the capital of the
Company have been placed by WH Ireland Limited with new and
existing investors at a price of 1 pence per share. The Placing
Shares were also accompanied by the issue of one warrant to
subscribe for one ordinary share in the Company for each Placing
Share (the "Placing Warrant"). The Placing Warrants are exercisable
at any time, for a period of 2 years, from the date of Admission at
the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at
1.5p.
On 1 February 2021, to satisfy additional demand, the company
conditionally placed a further 15,000,000 new
ordinary shares in the Company at a price of 1 pence per share
to raise gross proceeds of GBP150,000. The Further Placing Shares
were also accompanied by the issue of one warrant to subscribe for
one ordinary share in the Company for each Further Placing Share
(the "Further Placing Warrants"). When issued, the Further Placing
Warrants will be exercisable at any time, for a period of 2 years,
from the date of admission of the Further Placing Shares at the
following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at
1.5p.
On 2 March 2021, West Sussex County Council's Planning Committee
rejected the Company's planning application for an Extended Well
Test at Balcombe. The Company is presently evaluating all of the
options available with its partners to appeal this decision.
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END
FR EAFDPEEDFEAA
(END) Dow Jones Newswires
March 09, 2021 02:00 ET (07:00 GMT)
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