TIDMANGS
RNS Number : 2044S
Angus Energy PLC
07 March 2023
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.
7 March 2023
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 2022 (the "Accounts"), extracts of
which are set out below.
In addition, the Company's 2023 annual general meeting ("AGM")
will be held on 31 March 2023 at 11.00 a.m. at the offices of
Fladgate LLP, 16 Great Queen Street, London, WC2B 5DG.
The full copy of the Accounts along with the AGM Notice were
posted to all shareholders today and are also available on the
Company's website, http://www.angusenergy.co.uk/
.
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 Tel: +44 (0) 207 628
Cornish 3396
WH Ireland Limited
(Broker)
Katy Mitchell/ Harry Tel: +44 (0) 113 394
Ansell 6600
Flagstaff PR/IR angus@flagstaffcomms.com
Tim Thompson Tel: +44 (0) 207 129
1474
Fergus Mellon
Aleph Commodities info@alephcommodities.com
Disclaimers - this Announcement includes statements that are, or
may be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "forecasts", "plans", "prepares", "anticipates",
"projects", "expects", "intends", "may", "will", "seeks", "should"
or, in each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives,
goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They
appear in a number of places throughout this Announcement and
include statements regarding the Company's and the Directors'
intentions, beliefs or current expectations concerning, amongst
other things, the Company's prospects, growth and strategy. By
their nature, forward- looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual performance, achievements and
financial condition may differ materially from those expressed or
implied by the forward-looking statements in this Announcement. In
addition, even if the Company's results of operations, performance,
achievements and financial condition are consistent with the
forward-looking statements in this Announcement, those results or
developments may not be indicative of results or developments in
subsequent periods. Any forward-looking statements that the Company
makes in this Announcement speak only as of the date of such
statement and (other than in accordance with their legal or
regulatory obligations) neither the Company, nor the Bookrunner nor
Beaumont Cornish nor any of their respective associates, directors,
officers or advisers shall be obliged to update such statements.
Comparisons of results for current and any prior periods are not
intended to express any future trends or indications of future
performance, unless expressed as such, and should only be viewed as
historical data.
Beaumont Cornish Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting as
nominated adviser to the Company in relation to the matters
referred herein. Beaumont Cornish Limited is acting exclusively for
the Company and for no one else in relation to the matters
described in this announcement and is not advising any other person
and accordingly will not be responsible to anyone other than the
Company for providing the protections afforded to clients of
Beaumont Cornish Limited, or for providing advice in relation to
the contents of this announcement or any matter referred to in
it.
Contents
Officers and Advisors 2
Chairman's Statement
4
Strategic Report 6
Corporate Governance Statement 18
Audit Committee Report
25
Directors' Remuneration Report 27
Board of Directors 29
Directors' Report 30
Statements of Directors' Responsibilities 31
Stakeholder Engagement 34
Independent Auditor's Report 38
Consolidated Statement of Comprehensive Income 45
Consolidated Statement of Financial Position 46
Consolidated Statement of Changes in Equity 47
Consolidated Statement of Cash Flows 48
Notes to the Consolidated Financial Statements 49
Company Statement of Financial Position
79
Company Statement of Changes in Equity 80
Notes to the Company Financial Statements 81
Officers and Advisors
Directors
George Lucan (Chief Executive Officer) Patrick Clanwilliam
(Non-Executive Chairman) Carlos Fernandes (Finance Director)
Andrew Hollis (Technical Director)
Cameron Buchanan (Non-executive Director, resigned 4 October
2022) Paul Forrest (Non-Executive Director, appointed 18 July 2022)
Krzysztof Zielicki (Non-Executive Director, appointed 4 October
2022) Richard Herbert (Non-Executive Director, appointed 24 January
2023)
Secretary
Carlos Fernandes
Registered Office Building 3, 566 Chiswick Park Chiswick High
Road
London W4 5YA
Nominated Advisor Beaumont Cornish Limited 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 HSBC Holdings Plc PO Box 10
59 Old Christchurch Road Bournemouth
Dorset BH1 1EH
Barclays Bank Plc Leicester Leicestershire LE87 2BB
Registrars
Share Registrars Limited 27/28 Eastcastle Street London
W1W 8DH
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
2022.
It's been another busy year for Angus, with the acquisition of
Saltfleetby Energy Limited that culminated with first gas from
Saltfleetby delivered at the end of August 2022. With the
completion of the onsite processing facilities, the Company has
enjoyed several months of steady gas production.
With oil and gas prices looking to remain high for the
foreseeable future, Angus will look to maximise its portfolio by
turning its attention to the evaluation of the Southern Lobe at
Saltfleetby which has a further 20 BCF of 2C contingent resources.
Geologically the Saltfleetby gas field also has great gas storage
potential. Energy security is high on the Governments agenda and we
will continue to work with all stakeholders to assess the viability
of storage opportunities either now or at the end of field life.
The Company will focus on resuming production from its oil
assets.
Angus remains focused on the energy transition narrative and as
such will accelerate its geothermal developments which is targeted
on the acquisition and origination of new further gravimetric data,
and toward a seismic program, in the south west of England.
Financial and Statutory Information
Revenue from oil and gas production during the year is GBP3.142m
(2021: NIL) on production of a gross 1,378 bbls of oil and
1,273,994 Therms of natural gas (2021: NIL). This was the result of
resuming production from the Brockham Oil Field and at the
Saltfleetby Gas Field.
The Group recorded a loss of GBP111.947m, which included a
derivative loss of GBP110.309m in relation to the derivative
instrument, resulting in an adjusted operating loss of GBP1.638m
(2021: loss of GBP2.455m). The derivative loss is based on future
production and calculated using forward gas prices as at 30
September 2022. The derivative will be realised to a profit or loss
when the payments under the derivative instruments become due (see
note 25).
During these difficult economic times, the Company has continued
to make a conscious effort to cut costs at both corporate and
operational levels while still maintaining high level of
professionalism and operatorship. In line with starting gas
production the administrative costs have increased by GBP0.701m to
GBP2.619m (2021: GBP1.918m).
Outlook
With gas production at Saltfleetby increasing the Company looks
forward to positive cashflows for the year ahead.
The Board will focus on maximizing the potential from our
existing portfolio, including its geothermal projects and
accelerate its evaluation of new projects to complement production
from Saltfleetby.
Patrick Clanwilliam
Chairman
7 March 2023
Operating Review
On 30 August 2022, Angus successfully exported its first
commercial sales gas from Saltfleetby Gas Field to the national
grid. In December 2022, Angus instructed Oil Field International
("OIL") to review the early performance of the Saltfleetby gas
reservoir since production was restarted on 25th August 2022, after
a five-year shut in. We requested that OIL consider whether in
light of this new information, the gross reserves and forecast
production profiles contained in OIL's CPR of Effective Date
October 1st, 2021 were still valid.
Despite the delays to installing the second compressor and the
drilling of SF7, OIL concluded there is no reason to modify the
sales gas production profiles or gross gas reserves as reported in
October 2021.
Table 1 Sales Gas Production August 30th to Dec 7th, 2022 (from
two wells)
Avg Sales Recorded Gas Sales
Month Gas Flowrate for first 100 days CV
MMSCFD MM Th MMSCF BTU/SCF
---------------- -------------- ---------- --------
2 Wells on production during period
Aug 30-31 2022 0.6 0.01 1 1107
---------------- -------------- ---------- --------
Sep- 22 3.8 1.26 115 1099
---------------- -------------- ---------- --------
Oct- 22 5.4 1.86 168 1104
---------------- -------------- ---------- --------
Nov- 22 6.0 1.99 180 1107
---------------- -------------- ---------- --------
Dec 1-7 2022 5.8 0.45 40 1106
---------------- -------------- ---------- --------
Total 100 days 5.04 5.56 504 1104
---------------- -------------- ---------- --------
The drilling of the SF7v sidetrack at the Saltfleetby Field has
now concluded, reaching a total measured depth of 2746 meters in
the Westphalian 1D reservoir. The well bore has been secured with
4.5" liner to that depth, slotted across the reservoir. Completion
operations have commenced.
Following the setting of the well completion production tubing,
well cleanup operations will be conducted in the middle of March
once coiled tubing equipment becomes available. Flow testing will
follow shortly afterward and, assuming coiled tubing services are
available at the scheduled date, the additional flow from this well
should be available for export from 1 April. The Company will
announce results of the flow test once complete.
The Company is confident from the electric logging, mud logging
and gas shows in the reservoir section that the well will be a
successful producer. Furthermore, the well is drilled alongside and
replicates what was previously the best producing well in the
field.
Wet commissioning of the second compressor began at the end of
February and we expect successful full running in the coming days
and are confident that the unit will be available for duty well
before 1 April.
In October 2021 we published the results of the revised
Competent Persons Report for the Saltfleetby Gas field, which
reflected the higher revenues expected from the field.
The CPR, performed by Oilfield International Limited, gives the
net present value of the cash flows from the Saltfleetby Gas Field,
including the impact from the revised capex, the loan facility debt
service costs, the associated royalties and the mandatory hedging.
Oilfield International Limited has used a conservative discount
rate of 10%. Presenting 100% of the field values:
-- A conservative case, or P90, NPV10 of GBP63.3 million (Pre-Tax)
-- A mid-case, or P50, NPV10 of GBP95.6 million (Pre-Tax)
Alternatively expressed as estimates of net future cashflows,
but without discounting, can be summarised as follows:
-- A conservative or P90 sum of future cashflows to Angus of GBP82 million (Pre-Tax)
-- A mid-case, or P50, sum of future cashflows to Angus of GBP147.7 million (Pre-Tax)
In summary the CPR estimates production giving rise to gross
field revenues, before costs etc. on a mid-case basis of GBP230
million (previously GBP141 million). This approximates to a gas
price of 64p/therm being a mix of the actual volumes already hedged
at 43p/therm and the remaining unhedged volumes accorded prices
derived from the quoted and traded NBP forward curve to December
2026 and thereafter escalated by 1.5% per annum. The gross volume
of reported Gas Reserves is unchanged.
The full report is available on the Company website under
Presentations at the following link
https://www.angusenergy.co.uk/wp-content/uploads/2021/10/Angus-Energy-Saltfleetby-
Reserves-Valuation-Report.pdf .
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 North Sea Transition Authority ("NSTA"),
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 on-shore, conventional production and development of
hydrocarbons in the UK.
Review of activities
Saltfleetby
In August 2022, the Company had completed the installation of
the onsite processing facilities and the first compressor. With all
the necessary NSTA, EA and HSE permissions in place, commissioning
of the Saltfleetby Gas Field commenced, with first sales gas
exported to the national grid on 30 August 2022.
Spudding of the SF7 sidetrack began on 28 October 2022 and
completed on 28 February 2023. The sidetrack reached a measured
depth of 2,746 meters in the Westphalian 1D reservoir. Wet
commissioning of the second compressor began the week commencing 20
February 2023 and we expect successful full running in the coming
days and are confident that the unit will be available for duty
well before 1 April 2023.
The Company also hedged approximately 50% of the Company's share
of future gas sales, estimated under a conservative projection, for
three years beginning in July 2022. The average achieved price
under the Hedge, including all fees, costs and charges is 43 pence
per therm. Since entering into the Hedge agreements, we have seen a
significant increase in gas prices. As previously announced, the
Hedged limits were set at 50% of our estimated gas production
leaving the Company with enough headroom to comfortably meet the
requirements under the Hedge whilst still enjoying unhedged
production.
Geothermal
During the year the Company continued to progress its ambitions
of becoming a low-cost UK producer of baseload geothermal power.
Based on the acquired land gravity and radiometrics as well as the
desk top study on overall project economics the company has
produced a detailed Geothermal Development Plan.
The Geothermal Development Plan is split over 2 focused areas,
with each area's work program broken down into 4 Phases. The
program kicks off with further 2D/3D gravity and heat flow
modelling, a comprehensive seismic survey, shallow drilling and
finally a third party Feasibility Study.
Phase 1 is slated to commence in H1 2023 with the work to
include date review and processing, structural mapping, depth
estimation and heat flow analysis.
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 12 months
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 of 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 on Tuesday 2
March 2021, decided against the application. They refused the
application on the grounds that there are no exceptional
circumstances, and that it is not in the public interest for the
development to continue in the area and was this in contrary to
clauses in both the West Sussex and National Planning Policy
Framework.
Angus strongly disagreed with their opinion and an application
to appeal had been submitted. Amongst other things, the appeal
references the local and national planning policies referred to by
the Planning Committee and why both Angus and the Planning Officer
believe the development is acceptable when it is considered against
the development plan and any relevant material considerations. In
summary the principle of the development has been previously
accepted, the site selection represents the best environmental
option and is safeguarded, energy Policy states that the domestic
oil and gas industry has a critical role in maintaining the
country's energy security and is a major contributor to our economy
and minerals are given great weight with the extraction of
hydrocarbons seen as central to the UK energy policy in the
immediate and long-term future.
On 14 February 2023, our appeal against the decision by West
Sussex County Council to refuse permission for an extended well
test at the Balcombe oil site was upheld. As a consequence of the
decision by the Planning Inspectorate, the Company is now capable
of pursing this well test subject to satisfaction of planning
conditions noted in the Appeal Decision as well as the
determination of the variation to the Environmental Permit by the
Environment Agency which we understand to be imminent.
Lidsey
The Company carried out work to reprocess and reinterpret the
Lidsey seismic data. One
of the conclusions of the work was that previous seismic mapping
both underestimated the aerial extent of the reservoir and most
importantly its shape. The Company therefore acquired a new line of
seismic data and reprocess the existing seismic lines.
The Company's seismic reinterpretation of the Lidsey field was
completed and, having been subject to rigorous third party
verification. This is the last part of the most comprehensive
review of the Lidsey structure ever carried out and includes the
reprocessing of all historical seismic lines, the use of a newly
acquired east-west seismic line over the field and the data from
both the wells on the field and also nearby wells.
This remapping has resulted in some further changes to the shape
of the structure, but it now fits and is consistent with all of the
available data. The Company is confident that the new field mapping
explains the issues which were experienced with the Lidsey X2 well
in 2017. It is now the Directors' clear belief that the structure
culminates near the wellsite area and
extends to the east and northeast. Prior to the drilling of
Lidsey X2, it was thought that the structure extended to the west
and the westerly trajectory of the Lidsey X2 well accordingly
targeted an area close to the edge of the structure.
The new mapping shows there to be a significant structure not
dissimilar in area to the original structure considered by the
previous Competent Person's Report, which continues to support a
commercially significant estimate of oil in place. However, the
interpretation does allow Angus to narrow its field of focus in
target selection and explore low-cost options for remediation of
the field's productivity center around the reuse, workover or
side-tracking of the existing wells and these will be considered
with our partners in the next stage of the work.
The Company's re-mapping of the structure also shows it to
extend a significant distance out of the licence area in some
scenarios and Angus is now opening a dialogue with the holder of
that surrounding licence to consider how we might proceed together
to address the future of the field.
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 which included
an updated Hydrogeological Risk Assessment. The Environment Agency
had completed their determination of the permit variation and the
permit was issued on 02 March 2022.
A Field Development Plan was also submitted to this effect to
the NSTA which was approved. Recompletion of the BR X4Z well as a
Portland producer is slated for the end of Q2 2023 which will
increase production to circa 150 bopd.
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 North Sea Transition Authority ("NSTA")
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 incidents 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 10 recipients of the Scholarship
award.
Section 172 Statement
Under Section 172, Directors have a duty to promote the success
of the Company for the benefit of the members as a whole and, in
doing so, they should have regard to specified areas that relates,
by and large, to wider stakeholder interest. Further details of
these areas have been enumerated in Stakeholders Engagement section
on page 33.
Financial Review
The Group began the period with the following interests: 80% of
Brockham (PL235), 80% of Lidsey (PL241), 25% of Balcombe (PEDL244)
and 51% of Saltfleetby Gas Field (PEDL005).
The Group had a cash balance of GBP6.160m as at 30 September
2021.
During the period, the Company issued 897,748,245 ordinary
shares for cash, raising gross proceeds of GBP8,825,000. Please
refer to note 17 for a detailed breakdown.
During the period the Company also issued 3,461,538 at 0.65
pence per share, 8,750,000 at
0.8 pence per share, 5,555,555 at 0.9 pence per share,
20,250,000 at 1 pence per share,
3,068,182 at 1.1 pence per share, 61,398,568 at 1.2 pence per
share, 30,462,639 at 1.35 pence per share, 29,341,672 at 1.5 pence
per share and 18,025,597 at 1.663 pence per share. They were issued
in relation to an exercise of Company Warrants. Please refer to
note 18 for a detailed breakdown.
On 20 October 2021, the Company agreed an extension of the
GBP1.4m Convertible Loan Note repayable on 17 April 2022 by a
further 12 months until 17 April 2023. The Note, which was
otherwise convertible at 1p per ordinary share from 17 February
2022, will now only be convertible at the earliest of 17 July 2022
representing a six month extension. Additionally, the Company
retains the right to repay the Note at any time with the additional
grant of warrants at 1.3p per share as detailed in the RNS of 20
April 2020. All other terms of the Note remained the same. In
consideration for this extension. On 4 November 21, the Company
issued and allot to the Noteholder 11,200,000 ordinary shares.
On 16 March 2022, the company issued 39,200,000 ordinary shares
at 0.8 pence per share. The shares were used to settle litigation
with a financial provider (not being the Company's broker or Nomad)
in dispute relating to the Saltfleetby Loan Facility.
On 24 May 2022, the Company executed a share purchase agreement
to acquire the entire issued share capital of Saltfleetby Energy
Limited from Forum Energy Services Limited, giving the Company 100%
ownership of the Saltfleetby Gas Field. The total effective
consideration payable pursuant to the SPA is the sum of
GBP14,052,000.
On 24 May 2022, the company issued 91,000,000 ordinary shares at
1.0989 pence per share. These were consideration shares paid for
the acquisition of Saltfleetby Energy Limited.
On 24 May 2022, and in relation to the acquisition of
Saltfleetby Energy Limited, the Company issued 546,000,000 ordinary
shares at 1.2 pence per share.
On 24 May 2022, and in relation to the acquisition of
Saltfleetby Energy Limited, the Company issued 273,000,000 ordinary
shares at 1.0989 pence per share, raising gross proceeds of
GBP3,000,000.
On 24 May 2022, the Company issued 5,000,000 ordinary shares at
0.9429 pence per share. The shares were issued to the Lenders or
their representatives in lieu of a cash facility fee pursuant to
the Company's Saltfleetby Loan Development Facility at or around
the first anniversary of the Loan Completion.
On 12 July 2022, the Company issued 27,300,000 ordinary shares
at 1.0989 pence per share. The shares were fee shares relating to
the Direct Subscription and acquisition of Saltfleetby Energy
Limited.
The Group had cash balance of GBP0.747m at the end of reporting
year.
The Group generated GBP3.142m revenue from oil and gas
production during the year (2021: NIL).
The Group recorded a loss of GBP111.947m which included a
derivative loss of GBP110.309m in relation to the derivative
instrument, resulting in an adjusted loss of GBP1.638m (2021: loss
of
GBP2.455m). The derivative loss is based on future production
and calculated using forward gas prices as at 30 September 2022.
The derivative will be realised to a profit or loss when the
payments under the derivative instruments become due (see note 25).
For the year under review, the administrative costs increased by
GBP0.701m to GBP2.619m (2021: GBP1.918m).
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 Chief Executive, Finance and Technical
Director supervised by three experienced 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 23 employees, including management. The Company also relies on
third party experienced contractors.
We have appointed three 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 and gas; oil is priced in
US dollars and gas is priced in UK pounds, 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. Management
regularly reviews currency exposure with the aim of mitigating any
downside exposure where possible.
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 and gas 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 and gas negotiate
sales contracts directly with oil and gas purchasers, with the
result that the market determines the price of oil and gas. The
price depends in part on oil and gas quality, prices of competing
fuels, distance to market, the value of refined products and the
supply/demand balance. The marketability and prices of oil and gas
that may be discovered or acquired by the Group will be affected by
numerous factors beyond its control. The Group has entered into
commodity derivatives for its gas product to protect it from any
downside market risk (see note 25 for further details).
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 relating to Lidsey and
Brockham contained in the financial statements are taken from the
Competent Person's Report, at the time of AIM admission on 14
November 2016 and the hydrocarbon reserve and resources data
relating to Saltfleetby are taken from the Saltfleetby Competent
Person's Report published in October 2021.
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 GBP0.747m as at 30 September
2022 subsequent to the significant cash movements described during
the reporting period.
On 13 October 2022, the Company issued 127,400,127 ordinary
shares at 1.0989 pence per share. They were issued in relation to
the exercise of Company Warrants.
On 24 October 2022, the Company agreed the grant of 165.5
million share options under the Company's existing Employee
Incentive Scheme to Directors and other staff. The share options
have an exercise price of 2 pence per share (being a premium of 23%
to the closing price on 21 October 2022) and vest as to 100 per
cent., upon the closing mid--market price of the Ordinary Shares
being 3 pence or above (being 50 per cent. above the Exercise
Price. The options have a 4 year term from the date of issue.
On 28 October 2022, the Company issued 10,193,759 ordinary
shares at varying prices of 1.0989 pence per share, 1.2 pence per
share, 1.35 pence per share and 1.5 pence per share. They were
issued in relation to the exercise of Company Warrants.
On 02 November 2022, the Company issued 36,599,864 ordinary
shares at 1.0989 pence per share. They were issued in relation to
the exercise of Company Warrants.
On 21 November 2022, the Company issued 312,000 ordinary shares
at varying prices of 1.35 pence per share and 1.5 pence per share.
They were issued in relation to the exercise of Company
Warrants.
On 8 December 2022, the Company issued 500,000 ordinary shares
at varying prices of 1.2 pence per share, 1.35 pence per share and
1.5 pence per share. They were issued in relation to the exercise
of Company Warrants.
On 19 December 2022 the Company announced that it had
successfully raised gross proceeds of approximately GBP7 million by
means of a placing to certain institutional and other investors to
raise approximately GBP2 million, (the "Placing") and a direct
subscription to raise approximately GBP5 million (the
"Subscription") (together, the "Fundraising"), in each case at a
price of 1.65 pence per share (the "Fundraising Price").
The Fundraising was conducted in two tranches, with the initial
tranche of new Ordinary Shares under the Fundraising (comprising in
aggregate 341,219,000 Ordinary Shares, being the shares issued
under the Placing and 226,219,000 shares issued under the
Subscription) being issued under the Company's pre-existing share
capital authorities, and the second tranche of 89,781,000 new
Ordinary Shares ("Conditional Subscription"), together with
311,250,000 warrants in respect of the entire Fundraising
("Warrants"), being subject to shareholders passing the certain
resolutions ("Resolutions") at a General Meeting ("GM").
In addition, and conditional upon the passing of the
Resolutions, Forum Energy Services Ltd ("Forum") has agreed to
accept the allotment and issue of 60,606,061 new Ordinary Shares
(the "Forum Share Issue") at the Fundraising Price (together with
the issue of 30,303,030 warrants on the same basis as applicable to
the Fundraising ("Forum Warrants")) in settlement of the Company's
obligation to pay certain deferred consideration of GBP1,000,000 to
Forum in accordance with the Saltfleetby SPA as announced on 24 May
2022.
As announced on 2 March 2023, the Board resolved to make the
following changes, subject to final terms being agreed:
Richard Herbert has agreed to assume the role of Chief Executive
Officer in charge of day to day management of the Company and
responsibility for the ongoing development of the management team.
Richard's background at the helm of independent oil and gas
companies, such as Frontera Energy, combined with his experience as
Head of Exploration at BP, his particular experience in the UK
onshore makes him the ideal candidate for strengthening the
execution of the Company's strategy. George Lucan will take up the
role of Executive Chairman with particular responsibility for
stakeholder and governmental relations and strategic direction.
Andrew Hollis will remain Technical Director of the Company but
will be stepping down from his Board responsibilities. Paddy
Clanwilliam will step down as Non- Executive Chairman to become
Senior Independent Non-Executive Director, alongside Krzysztof
Zielicki, who remains our second Independent Non-Executive
Director.
Outlook
With production at Saltfleetby increasing, the Company looks
forward to achieving positive operational cashflow. The Company
will continue to explore further gas opportunities and mature its
geothermal projects in the south west of England with the intention
of not only creating shareholder value but also to address the
urgent need for transition energy projects.
Approved by the Board of Directors and signed on behalf of the
Board.
George Lucan Managing Director 7 March 2023
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 promotes 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 includes 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 17.
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 manner 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 it operates in. 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 neighbors; 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
Chief Executive Officer, 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 three
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,
considering 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 27-28.
8. Promote a corporate culture that is based on ethical values
and behaviors
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 11 and
12 and 32 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 23.
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 22-24.
The Board and its committees
At the beginning of the reporting year, the Board of the Group
consisted of three Executive Directors and two non-Executive
Directors. At the date of approval these financial statements, the
Board of the Group consisted of three Executive Directors and three
non- Executive Directors.
The Board met on 12 occasions during the year Board
to 30 meetings
September 2022. The table below sets out the
Board meetings held by the Company for the
financial year ended 30 September 2022 and
attendance of each Director:
Executive Directors
George Lucan [12/12]
Carlos Fernandes [12/12]
Andrew Hollis [12/12]
Non-Executive Directors
Patrick Clanwilliam [10/12]
Cameron Buchanan [10/12]
Paul Forrest [01/12]
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 Paul Forrest, Carlos Fernandes
and Patrick Clanwilliam, with Paul Forrest 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 25.
Remuneration committee
The remuneration committee comprised of Paul Forrest, Patrick
Clanwilliam and Krzysztof Zielicki, with Paul Forrest 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 27 to
28.
Nomination committee
The nomination committee comprised of Patrick Clanwilliam,
Andrew Hollis and Paul Forrest 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,
Carlos Fernandes 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 general compliance issues.
Other matters
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
7 March 2023
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:
1. 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 it prudent not to impair
the oil production assets based on the estimated oil reserves and
forecast level of future production.
2. 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 (b). The
directors are satisfied that the going concern basis is appropriate
for the preparation of the financial statements.
3. Valuation of Derivative
The Committee has reviewed the carrying value of the closing
derivative liability. Based on the work performed during the audit,
and through discussions with management, the committee considers
that the carrying value of the liability is appropriate.
Paul Forrest
Chairman - Audit Committee
7 March 2023
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 calibre 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 twenty 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
28. The share options will vest at various future dates as
described in the note 18 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:
2022 Salary Termination Share based Total
payment payment
GBP'000 GBP'000 GBP'000
George Lucan 127 - - 127
Andrew Hollis 127 - - 127
Carlos Fernandes 120 - - 120
Cameron Buchanan 41 30 71
Patrick Clanwilliam 75 - 75
Paul Forrest 7 7
497 30 - 527
=========== =========== ========== =========
2021 Salary Termination Share based Total
payment payment
GBP'000 GBP'000 GBP'000
George Lucan 127 - 7 134
Andrew Hollis 127 - 7 134
Carlos Fernandes 120 - 7 127
Cameron Buchanan 45 - - 45
Patrick Clanwilliam 75 - - 75
494 - 21 515
=========== ========== ========== =========
The Remuneration Committee met three times during the year to
review the scale and
structure of the executive directors' and senior employees'
remuneration.
Paul Forrest
Chairman - Remuneration Committee
7 March 2023
George Lucan
Chief Executive Officer
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 13 years commercial experience working in
the Mining and Oil & Gas industry.
Patrick Clanwilliam Non-Executive Director
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 .
Paul Forrest
Non-Executive Director
Paul Forrest has nineteen years' experience on the natural
resources sector, including ten years in offshore oil and gas in
the Philippines, and more recently seven years UK onshore oil and
gas culminating in the acquisition of the Saltfleetby Project in
2019. He is the former Financial Controller of AIM traded Forum
Energy Plc and Celtic Resources Plc.
Krzysztof Zielicki
Non-Executive Director
Krzysztof has over four decades of experience in the oil and gas
industry. He has held senior leadership positions in several Energy
Majors, including BP, TNK/BP and Rosneft, where he was Vice
President for M&A and Strategy.
Richard Herbert
Non-Executive Director
Richard is a geologist by profession, with over 42 years in the
upstream oil and gas business. His previous roles include COO
Exploration at BP, Executive Vice-President for Technology at
TNK-BP in Russia, Vice-President of Exploration for Talisman Energy
in Alberta, Canada and CEO of Canadian independent Frontera Energy
Corporation, operating in Latin America. He was formerly General
Manager of the Wytch Farm oil field in Dorset and is currently a
non- executive director of Norwegian service company PGS.
Directors' Report
The Directors present their report together with the audited
consolidated financial statements of Angus Energy plc for the year
ended 30 September 2022.
Results and Dividends
The Group recorded a loss after tax of GBP111.947m, which
included a derivative loss of
GBP110.309m in relation to the derivative instrument, resulting
in an adjusted loss of GBP1.638m (2021: loss of GBP2.455m). The
derivative loss is based on future production and calculated using
forward gas prices as at 30 September 2022. The derivative will be
realised to a profit or loss when the payments under the derivative
instruments become due. 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 (appointed on 29 January 2019)
Carlos Fernandes (appointed on 6 March 2019)
Andrew Hollis (appointed on 6 March 2019)
Non-Executive Director
Patrick Clanwilliam (appointed on 6 March 2019)
Cameron Buchanan (appointed on 18 October 2016,
resigned 4 October 2022)
Paul Forrest (appointed 18 July 2022)
Krzysztof Zielicki (appointed 4 October 2022)
Richard Herbert (appointed 24 January 2023)
The Directors of the Company at the date of this report, and
their biographical summaries, are given on page 29.
The Directors' remuneration is detailed in the Directors'
Remuneration Report on page 28. All Directors benefit from the
provision of Directors' and Officers' indemnity insurance policies.
Premiums payable to third parties were GBP33,300 (2021 -
GBP34,500).
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. The company has also acquired seismic lines and
conducted a ground magnetic survey to better understand the
geothermal potential of certain sites in the UK. 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 17 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
Forum Energy Limited 15.17%
Kemexon Ltd 9.00%
Aleph Fin C 7.90%
Share options
There were no Share Options issued during the reporting period.
See also note 18 for further details.
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 26 to
the financial statements.
Employees
The Group had 23 employees as at 30 September 2022 (2020: 13).
Employees are encouraged to directly participate in the business
through an Enterprise Management Incentive Scheme, which set out in
note 18 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
31.
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 UK adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006; 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 and pages 35 to 36. Review of the key decisions and
issues discussed in Board meetings and by various committees in
2022 is contained in the Corporate Governance Statement from pages
18 to 24.
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
-- Negotiating an extension of the GBP1,400,000 Convertible Loan Note issued on 20 April 2020.
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:
-- Acquisition of Saltfleetby Energy Limited with consideration
paid in shares and deferred consideration from gas sales (see note
30)
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
and we are closely involved and help shape the strategy and
timing.
Highlights include:
-- Procurement of equipment for the Saltfleetby development
-- Signing offtake agreement for the sale of condensate from Saltfleetby
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 2022, 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 NSTA, 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 acquisition of Saltfleetby Energy Limited by the NSTA
-- Successful EA permit received for the restart of production at Saltfleetby
-- Approval of the company's HSE safety case to export gas to the National Grid
Communities & Environment
As a responsible NTSA 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. 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 2022
-- Continued community engagement
-- Continued awards through the company's local scholarship program
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 2022, which comprise:
-- the Group statement of comprehensive income for the year ended 30 September 2022;
-- the Group and parent company statements of financial position as at 30 September 2022;
-- 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 in accordance with
UK adopted international accounting standards in conformity with
the requirements of the Companies Act 2006. 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 andRepublic
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 2022 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in accordance with UK
adopted international accounting standards in conformity with
the requirements of the Companies Act 2006;
-- 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 as applied to listed entities,
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.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting included
Reviewing management's financial projections for the Group and
parent company for a period of more than 12 months from the date of
approval of the financial statements.
-- Reviewing management's financial projections for the Group
and parent company for a period of
more than 12 months from the date of approval of the financial
statements.
-- Checking the numerical accuracy of management's financial projections
-- Challenging management on the assumptions underlying those
projections and sensitised them to reduce anticipated net cash
inflows from future trading activities.
-- Obtained the latest management results post year end 30
September 2022 to review how the Group and parent company are
trending toward achieving the forecast.
-- Performed sensitivity analysis on key inputs of the forecast
by calculating the impact of various scenarios and considering the
impact on the group and parent Company's ability to continue as a
going concern in the event that a downward scenario occurs.
-- Assessing the completeness and accuracy of the matters
described in the going concern disclosure within the significant
accounting policies as set out in Note 3.3.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
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 is GBP2,200,000 (2021:
GBP420,000) which is based on 2% of the derivative's fair value
movement of GBP110.309m. A Specific materiality for the Group
financial statements other than the derivative was determined to be
GBP450,000 based on 3% of Group net assets. The parent company
overall materiality is set at GBP100,000 (2021:
GBP75,000) based on a percentage of loss before tax.
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. This
is set at GBP315,000 (2021: GBP225,000) for the group and GBP71,429
(2021: GBP56,260) for the parent company.
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 GBP23,000 (2021:
GBP15,000). 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. We set out below, together with the material uncertainty
related to going concern above, those matters we are identified as
key audit 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 & We focused on this area due to the
gas production assets and significance of the carrying value
recovery of Investment of the assets. The risk of impairment
in subsidiaries. was considered likely to be highly
sensitive to assumptions and estimates
At 30 September 2022, the about future oil and gas prices and
carrying value of oil & discount rate. Other assumption include
gas production assets was exchange rates, future production levels,
GBP80.792 million. reserves and operating costs.
The recoverable value of We evaluated management's assessment
the Saltfleetby, Brockham of indicators of impairment and recoverability
and Lidsey production assets assessment for the Group's oil & gas
are based on the net present production assets. We have:
value of estimated future * tested price and discount rate assumptions by
net cash flow after the comparing forecast oil price assumptions to the
application of an appropriate latest market evidence available and reviewed the
discount rate. If the production reasonableness of the discount rate applied;
rate or reserve quantity
are less than anticipated,
appropriate adjustments * tested the accuracy of the forecast cash flows and
would be necessary to further the assumptions used within the cash flow projection
impair the carrying value model.
of these assets.
* We assessed the quality of management's previous
budgets and forecasts by comparing them to actual
performance.
* We assessed the timing of when Saltfleetby was
reclassified from E&E asset to Production asset as a
result of entering gas production during the
financial year.
* Considered the future recoverability of the
Saltfleetby production asset in respect of
recoverability of the parent company's investment in
subsidiary.
We have considered the adequacy of
the disclosure to the financial statements
and the work performed by management
including the key judgement and sensitivity
analysis presented in note 4, note
11, and note 5 the Parent Company's
Investment in subsidiary (pg 82) respectively.
================================== ==============================================================
Carrying value of exploration
and evaluation (E&E) assets We reviewed management's assessment
of indicators of impairment for the
At 30 September 2022, 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 GBP5.572 million. technical work to date. In
addition, we evaluated management's
The Balcombe site is still Net Present Value (NPV) models for the
in the exploration and Balcombe assets. We challenged the key
evaluation phase as technical estimates and assumptions used by management.
and economic feasibility
have yet to be established. We also reviewed management's assessment
of the future decommissioning costs
The recoverable value and assessed the appropriateness of
of these assets are based the assumptions concerning the timing
on the net present value and discounting of the estimated cost
of estimated future net of decommissioning.
cash flow after the application
of an appropriate discount We reviewed the disclosure made concerning
rate. If the production thismatter to ensure that it is consistent
rate or reserve quantity with our understanding.
are less than anticipated,
appropriate adjustments
would be necessary to
impair the carrying value
of these assets.
================================== ===================================================
Carrying value of derivative We obtained copies of the contracts
financial instrument between the Group and the provider of
the Gas Swap arrangements.
At 30 September 2022,
the carrying value of We obtained the Independent pricing
the gas swap derivative curve data (I.C.I.S Heren) as at 30
financial instrument was September 2022.
GBP 158.680 million, recorded We recalculated management's assessment
in liabilities. of the valuation of the derivative as
at 30 September 2022 benchmarked to
The valuation of this the I.C.I.S Heren curve.
instrument is subjective
and variations in this We discussed the process of valuation
value would have a material with management and the provider of
impact on the income statement the gas swap arrangements.
and the statement of financial
position.
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 andwe express no such opinion.
Other information
The directors are responsible for the other information
contained within the annual report. 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.
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 this
gives rise to a material misstatement in the financial statements
themselves. 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 forwhich 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 requiresus to report to you if, in our
opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequatefor 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 recordsand 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 areresponsible for the
preparation of the financial statements and for being satisfied
that they give a trueand 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 orerror.
In preparing the financial statements, the directors are
responsible for assessing the group's and parentcompany'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 liquidatethe 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 thatan 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
theaggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below however the primary responsibility for the
prevention and detection of fraud lies with management and those
charged with governance of the Company.
-- We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and the procedures in
place for ensuring compliance. The most significant identified were
the Companies Act 2006 and the QCA Corporate Governance Code. Our
work included direct enquiry of the Company Secretary who oversees
all legal proceedings, reviewing Board and relevant committee
minutes and inspection of correspondence.
-- As part of our audit planning process we assessed the
different areas of the financial statements, including disclosures,
for the risk of material misstatement. This included considering
the risk of fraud where direct enquiries were made of management
and those charged with governance concerning both whether they had
any knowledge of actual or suspected fraud and their assessment of
the susceptibility of fraud. We considered the risk was greater in
areas that involve significant management estimate or judgement.
Based on this assessment we designed audit procedures to focus on
the key areas of estimate or judgement, this included specific
testing of journal transactions, both at the year end and
throughout the year.
-- We used data analytic techniques to identify any unusual
transactions or unexpected relationships, including considering the
risk of undisclosed related party transactions.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that some material misstatements of the financial
statements may not be detected, even though the audit is properly
planned and performed in accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly
significant in the case of misstatement resulting from fraud
because fraud may involve sophisticated and carefully organised
schemes designed to conceal it, including deliberate failure to
record transactions, collusion or intentional misrepresentations
being made to us.
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 Part16 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: 7 March 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME YEARED 30
SEPTEMBER 2022
2022 2021
Note GBP'000 GBP'000
Revenue 5 3,142 -
Cost of sales (581) (294)
Depletion cost (529) -
--------- --------
Gross profit / (loss) 2,032 (294)
Administrative expenses (2,619) (1,918)
Share option charge 18 (811) (182)
--------- --------
Operating loss 6 (1,398) (2,394)
Derivative financial instrument loss 25 (110,309) (13,143)
Finance cost 7 (240) (61)
--------- --------
Loss before taxation (111,947) (15,598)
Taxation 9 - -
--------- --------
Loss for the year 6 (111,947) (15,598)
========= ========
Total comprehensive loss for the year 6 (111,947) (15,598)
--------- --------
Loss for the year attributable to:
Owners of the parent company (111,947) (15,598)
--------- --------
Total comprehensive loss attributable
to:
Owners of the parent company (111,947) (15,598)
--------- --------
(111,947) (15,598)
========= ========
Earnings per share (EPS) attributable
to owners of the parent: 20
Basic and diluted EPS (in pence) (6.79) (1.78)
The notes on page 49 to 78 form part of these of financial
statements All amounts are derived from continuing operations.
2022 2021
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 27 8
Exploration and evaluation assets 12 5,572 13,073
Oil & gas production assets 11 80,792 6,534
Lease assets 28 48 11
Trade and other receivables 15 - 11,117
--------- --------
Total non-current assets 86,439 30,743
--------- --------
Current assets
Trade and other receivables 15 4,107 5,132
AFS financial investments 14 20 28
Lease assets 28 33 -
Inventory 16 3 -
Cash and cash equivalents 747 6,160
--------- --------
Total current assets 4,910 11,320
--------- --------
TOTAL ASSETS 91,349 42,063
========= ========
EQUITY
Equity attributable to owners
of the parent:
Share capital 17 5,529 1,933
Share premium 17 38,708 23,605
Merger reserve 19 (200) (200)
Loan note reserve 23 106 106
Accumulated loss (138,599) (27,463)
--------- --------
TOTAL EQUITY (94,456) (2,019)
========= ========
Current liabilities
Trade and other payables 21 11,154 1,974
Loan payable - current 24 5,250 1,500
Derivatives liability 25 86,583 3,083
--------- --------
Total current liabilities 102,987 6,557
--------- --------
Non-current Liabilities
Provisions 22 4,369 3,007
Trade and other payables 21 52 1,331
Loan payable - non current 24 6,300 10,500
Derivatives liability 25 72,097 22,687
--------- --------
Total non-current liabilities 82,818 37,525
--------- --------
TOTAL LIABILITIES 185,805 44,082
========= ========
TOTAL EQUITY AND LIABILITIES 91,349 42,063
========= ========
The notes on page 49 to 78 form part of these of financial
statements
The financial statements were approved by the Board of Directors
and authorized for issue on 7 March 2023 and were signed on its
behalf by:
George Lucan - Director Company number: 09616076
Share Merger Loan Note Accumulated Total
Share capital premium reserve reserves loss equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- -------- ------------ --------- ----------- -----------
Balance at 30 September
2020 1,430 21,982 (200) 106 (12,047) 11,271
Loss for the year -- -- - - (15,598) (15,598)
------- -------- ------------ --------- ----------- -----------
Total comprehensive
income for the year - - - - (15,598) (15,598)
------- -------- ------------ --------- ----------- -----------
Transaction with
owners
Issue of shares 503 1,770 -- - - 2,273
Less: issuance costs -- (147) -- - - (147)
Grant of share options -- - -- - 182 182
------- -------- ------------ --------- ----------- -----------
Balance at 30 September
2021 1,933 23,605 (200) 106 (27,463) (2,019)
------- -------- ------------ --------- ----------- -----------
Loss for the year -- -- - - (111,947) (111,947)
------- -------- ------------ --------- ----------- -----------
Total comprehensive
loss for the year - - - - (111,947) (111,947)
------- -------- ------------ --------- ----------- -----------
Transaction with
owners
Issue of shares 3,596 15,615 -- - - 19,211
Less: issuance costs -- (512) -- - - (512)
Grant of share options -- - -- - 811 811
------- -------- ------------ --------- ----------- -----------
Balance at 30 September
2022 5,529 38,708 (200) 106 (138,599) (94,456)
------- -------- ------------ --------- ----------- -----------
The notes on page 49 to 78 form part of these of financial
statements
Year ended Year ended
30 September 30 September
2022 2021
GBP'000 GBP'000
Cash flow from operating activities
Loss for the year before taxation (111,947) (15,598)
Adjustment for:
Derivative financial instrument loss 110,309 13,143
Share option charge 811 182
Equity settled in lieu professional fees 683 -
Interest payable 234 61
Depletion charge 529 -
Lease amortization charges 35 -
Depreciation of owned assets 11 7
------------------- ---------------------
Cash generated/(used) in operating activities
before changes in working capital 665 (2,205)
Change in trade and other receivables 1,860 (3,013)
Change in other payables and accruals (5,043) 433
------------------- ---------------------
Cash used in operating activities before
tax (2,518) (4,785)
Income tax paid - -
------------------- ---------------------
Net cash flow used in operations (2,518) (4,785)
------------------- ---------------------
Cash flow from investing activities
Acquisition cost of Saltfleetby Energy
Limited (250)
Acquisition of property, plant and equipment 10 (15) -
Acquisition of exploration and evaluation
assets 12 (12,338) (4,890)
Acquisition of oil and gas production assets 11 (276) (131)
------------------- ---------------------
Net cash flow from investing activities (12,879) (5,021)
------------------- ---------------------
Cash flow from financing activities
(Repayment)/drawdown of debt facility (450) 12,000
Lease principal repayment (30) (12)
Proceeds from issuance of shares 10,464 2,126
------------------- ---------------------
Net cash flow from financing activities 9,984 14,114
------------------- ---------------------
Net (decrease)/increase in cash & cash
equivalents (5,413) 4,308
Cash and cash equivalent at beginning of
year 6,160 1,852
------------------- ---------------------
Cash and cash equivalent at end of year 747 6,160
=================== =====================
The notes on page 49 to 78 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
UK adopted international accounting standards in conformity with
the requirements of the Companies Act 2006. The financial
statements have been prepared on the historical cost basis except
for certain assets and liabilities 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
GBP111.947 million which included a derivative loss of GBP110.309
million for the derivative instrument resulting in an adjusted loss
of GBP1.638 million (2021: loss of GBP2.455 million) and recorded
net cash outflow used from operating activities of GBP1.118 million
(2021: GBP4.785 million ). The derivative loss is based on future
production and calculated using forward gas prices as at 30
September 2022. The derivative will be realised to a profit or loss
when the payments under the derivative instruments become due.
The Group meets its day to day working capital requirements
through existing cash reserves. At 30 September 2022, the Group had
GBP0.747 million of available cash. During the year, the Group
raised gross proceeds of
GBP8,825 million as a result of placing of new ordinary shares
and converting warrants to ordinary shares.
The war in Ukraine and the level of inflation in the UK has not
had a significant immediate impact on the company's operations. The
Directors are aware that if the current situation becomes further
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 potential delays to expected future revenues. In
making their overall assessment, the Directors took into account
the
advanced stage of the development of the Saltfleetby gas field
and the impact of the derivative instrument if there were delays in
gas production. As outlined in note 25 the Group has committed to
future cash flows as a result of the derivatives in place which are
due even if gas is delayed.
Forecast cashflows place reliance on there not being a
suspension of gas production for an unforeseen significant period.
Current production levels are in excess of derivative
requirements.There are no present operational concerns and whilst
there are mitigating steps that could be taken, the contracted
derivative will need to be settled at a fixed point in time. In the
event of any significant delay this would be subject to further
negotiation with the derivative holder or further funding may be
required. It is also noted there is a catch-up derivative payment
of GBP4,175k due in June 2023 which the group is forecast to meet
however should there be a timing difference between cash inflows
and outflows then Further funding may be required. The Directors
have therefore identified a material uncertainty which may cast
doubt over the Group's ability to continue as a going concern.
Based on the current management's plan, management considered
that the working capital from the expected revenue generation 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 preparation, notwithstanding the material
uncertainty as outlined above. The Director has assessed the
company's ability to continue as a going concern and have
reasonable expectation that the company has adequate resources to
continue operations for a period of at least 12 months from the
date of approval of these financial statements.
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
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.
(e) 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.
Contract Debtor
Pre-acquisition of Saltfleetby Energy Limited, gains and losses
due by Saltfleetby Energy Limited in relation to their 49% share of
the Derivative Instrument was recorded in Trade & Receivables
as a contract debtor with the debt repayable from gas sales as per
the terms in the Joint Venture Agreement. Post-acquisition of
Saltfleetby Energy Limited, these are removed on Group
consolidation.
Borrowing cost
Borrowing cost that are directly attributable to the
acquisition, development, or production of a qualifying asset, that
necessarily takes substantial time to prepare, are capitalized as
part of the cost the respective asset. It consists of interest and
other cost in connection with the borrowing of the funds.
Capitalization commences when activities to prepare the asset are
in progress or in future re-development activities and ceases when
all activities necessary to prepare the asset are completed. Other
borrowing costs are recognized in the statement of profit and loss
and other comprehensive income in the period in which they are
incurred.
Derivative financial instrument
The group uses derivative financial instrument, to hedge its
commodity price risk, such as commodity swap contracts. The Group
has elected not to apply the hedge accounting on this derivative.
Derivative financial instruments are recognized at fair value on
the date on which the contract is entered into and subsequently
measured at fair value. Derivatives are carried as financial asset
when the fair value is greater than its initial measurement and
financial liabilities when fair value is negative. Any gains or
losses arising from the changes in fair value of the derivatives
are recognise in the statement of profit and loss and other
comprehensive income.
As at 30 September 2022, the Group's derivative liabilities
amounted to GBP158.680 million as a result of the hedging agreement
entered into with Mercuria Energy Trading SA under a Swap Contract
(see Note 25)
In the determining the fair values of the financial asset and
liabilities, instruments are analysed into Level 1 to 3 as
follows:
Level 1: Fair value measurements derive from quoted prices
(unadjusted) in active market for identical asset or
liabilities.
Level 2: Fair value measurement derive from inputs other than
quoted prices included within level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3: Fair value measurements derive from valuation technique
that include inputs for the asset or liability that are not based
on observable market data.
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. 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 considered 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
natural gas and 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 the natural gas passes from our pipeline
to the national grid or when 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 natural gas or crude oil. Revenue from the production of oil and
gas 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. 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 E&E assets and oil and gas production assets at 30
September 2022 were approximately GBP5.572 million (2021: GBP13.073
million) and GBP80.792 (2021:
GBP6.534 million) respectively.
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 and note 11. 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 22, the provision at reporting date
represents management's best estimate of the present
value of the future decommissioning costs required.
(d) Valuation of derivative liability
On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3)
entered into a derivative agreement with Mercuria Energy Trading SA
(METS) under a Swap contract as part of the condition of the Loan
Facility (see Note 25). The derivative instrument was used to
mitigate price risk on the expected future cash flow from the
production of Saltfleetby Gas Field. Under the Swap contract, AWB3
will pay METS the floating price while METS will pay AWB3 the fixed
price on the sale of gas from the field.
The carrying value of the financial instrument approximates
their fair value and was valued using Level 2 fair value hierarchy
valuation. The fair value has been determined with reference to
commodity yield curves, as adjusted for liquidity and trading
volumes as at the reporting date supplied by the Group's hedging
derivative partner, Mercuria Energy Trading. Management also
assessed the valuation of these swaps using publicly
available forward pricing curves.
(e) Acquisition of Saltfleetby Energy Limited
The group has determined the acquisition of Saltfleetby Energy
Limited as being outside the definition of IFRS 3 and therefore is
not accounting as a business combination.
5. Revenue and segment information
Currently, the Group's principal revenue is derived from the
sale of natural gas and 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:
2022 2021
GBP'000 GBP'000
Sale of oil 97 -
Sale of natural gas 3,045 -
- -- - -- -- - -- -- - -- -
- -- - -- -- -
-- -- -
-- -
3,142 -
======================================= =======================================
All the non-current assets of the Group are located in the
United Kingdom. All revenue arising from sale of natural gas is
derived from sales to Shell plc and represents over 97% of the
Company's revenue.
6. Operating loss
Operating loss is stated after charging/(crediting):
2022 2021
GBP'000 GBP'000
Depreciation of owned assets 11 7
Net loss on foreign currency translation - -
Employee benefit expense 1,299 1,078
Auditor's remuneration
Fees payable to company's auditor in respect
to the audit of the
Parent Company and consolidated financial
statements 48 45
- -- - -- -- - -- -- - -- - - -- -
-- -- -
-- -- -
-- -
48 45
=================== = ===================
=
Adjusted operating loss
The adjusted operating loss has been arrived at after
charging/(crediting):
2022 2021
GBP'000 GBP'000
Operating loss after tax 111,947 15,598
Derivative financial instrument
loss (110,309) (13,143)
- -- - -- -- - -- - -- -
-- - -- - -- -- -
-- -- -
-- -
Adjusted loss after tax 1,638 2,455
=================== ===================
= =
7. Finance cost
2022 2021
GBP'000 GBP'000
Interest payable on convertible loan
notes 78 56
Loss on revaluation of AFS investment 8 4
Other finance costs 5 1
Loan interest payment 149 -
- -- - -- -- - -- -
- -- -- - -- -- -- -
- -- -- -
-- -
240 61
=================== ===================
= =
All interest paid under the loan payable described in note 24
has been capitalised pre-production, in line
with the Company's accounting policies.
8. Employee benefit expense
2022 2021
GBP'000 GBP'000
Wages and salaries 1,159 971
Social security costs 140 107
- -- - -- -- - -- -- - -- -
- -- - -- -- -
-- -- -
-- -
1,299 1,078
=================== ===================
= =
The directors received salary from the group totaling GBP497,000
(2021: GBP494,000)
Key management are considered to be the directors. Details of
each director's emoluments are in the
directors' remuneration report.
2022 2021
Number Number
The average number of employees during the year was:
Director 5 5
Management 8 8
Operators 10 -
- -- - -- -- - -- -- - -- -
- -- - -- -- -
-- -- -
-- -
23 13
=================== = ===================
=
9. Taxation on ordinary activities
No liability to corporation tax arose for the years ended 30
September 2022 and 2021, as a result of underlying losses brought
forward.
Reconciliation of effective tax rate
2022 2021
GBP'000 GBP'000
Loss before tax
(111,947) (15,598)
Tax at the UK Corporation tax rate
of 19% (2021
19%) (21,270) (2,964)
Revenue (597) -
Expenses not deductible for tax purposes 107 56
Unrecognised deferred tax 21,760 2,908
- -- - -- -- - -- -
- -- -- - -- -- -- -
- -- -- -
-- -
- -
=================== ===================
= =
The Group has incurred indefinitely available tax losses of
GBP173,495,965 (2021: GBP21,014,268), which includes tax loss
incurred on the acquisition of Saltfleetby Energy Limited, 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
GBP154,000 (2021: GBP35,000) of deductible temporary difference in
respect of the share-based payment.
No deferred tax asset was recognised in respect to these
accumulated tax losses as there is insufficient evidence that the
amount will be recovered in future years, in line with this a
deferred tax asset of GBP376k was also not recognised for in the
money outstanding share options.
10. Property, plant and equipment
Plant and Motor Fixtures Total
machinery vehicles and
fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost or
valuation
At 1 October
2020 23 35 8 66
Additions 2 - - 2
- -- - -- - -- - - -- - -- - -- -
-- - --- -- -- - -- - --- -- --
--- - ---
At 30
September
2021 25 35 8 68
Additions 9 6 - 15
Acquisition
of
Saltfleetby
Energy
Limited 121 32 227 380
- -- - -- - -- - - -- - -- - -- -
-- - --- -- -- - -- - --- -- --
--- - ---
At 30
September
2022 155 73 235 463
- -- - -- - -- - - -- - -- - -- -
-- - --- -- -- - -- - --- -- --
--- - ---
Depreciation
and
impairment
At 1 October
2020 14 33 8 55
Charge for
the year 3 2 - 5
- -- - -- - -- - - -- - -- - -- -
-- - --- -- -- - -- - --- -- --
--- - ---
At 30
September
2021 17 35 8 60
Charge for
the year 8 3 - 11
Acquisition
of
Saltfleetby
Energy
Limited 110 28 227 365
- -- - -- - -- - - -- - -- - -- -
-- - --- -- -- - -- - --- -- --
--- - ---
At 30
September
2022 135 66 235 436
- -- - -- - -- - - -- - -- - -- -
-- - --- -- -- - -- - --- -- --
--- - ---
Net book
value
At 30
September
2021 8 - - 8
======================================= ======================================= ======================================= =======================================
-
At 30
September
2022 20 7 27
======================================= ======================================= ======================================= =======================================
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 2020 7,373
Additions 128
- -- - -- -- - ---
At 30 September 2021 7,501
Additions 276
Increase abandonment provision 125
Acquisition of Saltfleetby Energy Limited 54,535
Transfer from Exploration and Evaluation
assets 19,851
- -- - -- -- - ---
At 30 September 2022 82,288
- -- - -- -- - ---
Depreciation and impairment
At 1 October 2020 967
At 30 September 2021 967
Charge for the year 529
- -- - -- -- - ---
At 30 September 2022 1,496
- -- - -- -- - ---
Net book value
At 30 September 2021 6,534
=======================================
At 30 September 2022 80,792
=======================================
Saltfleetby went into production on 30 August 2022. In line with
the company's accounting policy the asset has been reclassified as
an Oil & Gas Production Asset, including assets acquired from
Saltfleetby Energy Limited
As at 30 September 2022, the Group retained a 100% interest in
the Saltfleetby field, an 80% interest in the Lidsey field, an 80%
interest in the Brockham field and is still the operator of all the
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 and
gas prices, discount rates and the level and timing of
expenditures, all of which are inherently uncertain. The key
assumptions used are as follow:
2022 2021
Discount rate 10% 10%
Crude oil price (per barrels) $75 $63
Natural gas price (per Therm) GBP1.14 -
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
Saltfleetby gas field and Brockham and Lidsey oil fields and the
results of the analysis can be summarised as follow:
-- The estimated natural gas price would need to fall by circa
30 percentage points lower than the basis assumption before an
impairment of the Saltfleetby gas field would need to be
considered.
-- The estimated brent crude price would need to fall by circa
55 percentage points lower than the basis assumption for Balcombe,
25 percentage points lower than the base assumption for Brockham
and 10 percentage points lower than the base assumption for Lidsey
before an impairment of the respective oil fields would need to be
considered.
12. Exploration and evaluation assets
Total
GBP'000
Cost or valuation
At 1 October 2020 8,183
Additions 4,890
- -- - -- -- - --
-- - -- -
At 1 October 2021 13,073
Additions 12,338
Increase abandonment provision 12
Acquisition Saltfleetby Energy Limited 54,535
Transfer to Oil and Gas Production
Asset (74,386)
- -- - -- -- - --
-- - -- -
At 30 September 2022 5,572
Saltfleetby went into production on 30 August 2022. In line with
the company's accounting policy the asset
has been reclassified as an Oil & Gas Production Asset, this
relates to the GBP74.386m in the above note.
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. Should the appeal be
unsuccessful the management will consider further legal options and
assess whether an impairment is necessary. See Strategic Review on
page 10.
Additional cost related to Exploration assets, which are
directly attributable to the qualifying asset that necessarily
takes substantial time to prepare, are capitalized as part of the
cost of the respective asset and it consist of interest and other
cost in connection with the borrowing of the funds. In 2022, total
capitalised Interest on Loan amounts to GBP899,000 (2021:
GBP475,000) and total capitalised commitment fee amounts to
GBP585,000 (2021: GBP360,000)
13. Subsidiaries
The details of the subsidiaries are as follows:
Name of subsidiary/ place of Principal activity
incorporation
Angus Energy Holdings UK Limited Investment holding company
Angus Energy Weald Basin No.1 Investment holding company
Limited
Angus Energy Weald Basin No.2 Investment holding company
Limited
Angus Energy Weald Basin No.3 Oil extraction for distribution
Limited* to third parties
Angus Energy North America Limited Dormant company
Saltfleetby Energy Limited ** Natural Gas Extraction
* indirect wholly owned by Angus Energy Weald Basin No.2 Limited
(AEWB2).
**Saltfleetby Energy Limited was acquired by the Group on 24 May
2022, see further details on Note 30.
The registered office address of the respective entity as
follow:
Registered address Name of subsidiary
--------------------------------------- --------------------------------------------
Building 3 Chiswick Park, 566 Angus Energy Weald Basin No.2 Limited
Chiswick High Road, London, Angus Energy North America Limited
W4 5YA. Saltfleetby Energy Limited
6 South Charlotte Street, Edinburgh, Angus Energy Holdings UK Limited
Scotland, Angus Energy Weald Basin No.1 Limited
EH2 4AN Angus Energy Weald Basin No.3 Limited
14. Available for sale financial investments
2022 2021
GBP'000 GBP'000
At 1 October 28 32
Loss on revaluation for the year (8) (4)
- -- - -- -- - -- - -- - --
-- - -- - -- - --
-- - --
-
At 30 September 20 28
=================== ===================
= =
Financial investment are shares held in Alba Mineral Resources
Plc (Alba) consisting of 12,407,910 shares. The shares represents
consideration received by Angus for the disposal of Alba's 5%
interest in Brockham oilfield.
The changes in the value of these investment have been
determined directly by reference to the published price quoted on
AIM at reporting date.
15. Trade and other receivables
2022 2021
GBP'000 GBP'000
Non-Current
Contract debtor - derivative - 11,117
- -- - -- -- - -- - -- - --
-- - -- - -- - --
-- - --
-
- 11,117
Current
Contract debtor - derivative - 1,510
Accrued sales income 2,975 -
Amounts due from farmees 3 3,073
Rent deposit 4 -
VAT recoverable 206 218
Other receivables 919 331
- -- - -- -- - -- - -- - --
-- - -- - -- - --
-- - --
-
4,107 5,132
- -- - -- -- - -- - -- - --
-- - -- - -- - --
-- - --
-
TOTAL 4,107 16,249
=================== ===================
= =
The carrying amount of trade and other receivables approximates
to their fair value.
2022 2021
GBP'000 GBP'000
Trade and other receivables 4,211 16,353
Less: Impairment allowance (104) (104)
- -- - -- -- - -- - -- -
-- - -- - -- -- -
-- -- -
-- -
4,107 16,249
=================== ===================
= =
In 2021 The receivables from Contract Debtors amounting to
GBP12.627m was recognised in the statement of financial position.
It represented the 49% share of Saltfleetby Energy Limited on the
Derivative Liability as a result of a fair value valuation on the
instruments. In 2022, and due to the acquisition of Saltfleetby
Energy Limited, this has been removed on consolidation. See also
note 25 and note 30
16. Inventory
As at 30 September
2022 2021
GBP'000 GBP'000
Inventory
Acquired with Saltfleetby Energy Limited 3 -
Movements - -
- -- - -- -- - - -- - --
-- -- - -- - -- - --
-- - --
-
Total 3 -
=================== ===================
= =
Stocks Inventories held are raw materials and consumables that
has been acquired by the Group thru its acquisition of Saltfleetby
Energy Limited. They have been valued at net realisable value.
17. Share capital
Allotted, called up and fully paid:
Issue price Number Ordinary
In pence of share Share premium
shares capital
Ordinary share of GBP0.002 GBP'000 GBP'000
each
As at 30 September 2020 715,158,325 1,430 21,982
Issue of shares 3 November
2020 0.6 9,678,945 20 39
Issue of shares 23 December
2020 0.6 41,664,999 83 167
Issue of shares 27 January
2021 1.0 150,000,000 300 1,200
Issue of shares 8 April
2021 1.0 15,000,000 30 120
Issue of shares 3 June
2021 0.9429 35,000,000 70 245
Less: Issuance costs - - (148)
======= ==================== = =================== =
At 30 September 2021 966,502,269 1,933 23,605
Issue of shares 4 November
2021 0.002 11,200,000 22 -
Issue of shares 5 November
2021 0.65 115,384,611 231 519
Issue of shares 4 February
2022 0.8 175,000,000 350 1,050
Issue of shares 16 March
2022 0.8 39,200,000 78 235
Issue of shares 11 April
2022 1.1 61,363,634 123 552
Issue of shares 24 May
2022 1.09896 91,000,000 182 818
Issue of shares 24 May
2022 1.2 546,000,000 1,092 5,460
Issue of shares 24 May
2022 1.0989 273,000,000 546 2,454
Issue of shares 24 May
2022 0.9429 5,000,000 10 37
Issue of shares 4 July
2022 1.0989 273,000,000 546 2,454
Issue of shares 12 July
2022 1.0989 27,300,000 54 245
Issue of shares 13 July
2022 1.2 403,226 2 4
Issue of shares 13 July
2022 0.9 150,000 1 1
Issue of shares 13 July
2022 1.2 5,250,000 10 53
Issue of shares 5 September
2022 0.65 3,461,538 7 15
Issue of shares 5 September
2022 0.8 8,750,000 17 52
Issue of shares 5 September
2022 0.9 5,405,555 11 38
Issue of shares 5 September
2022 1.1 3,068,182 6 28
Issue of shares 5 September
2022 1.2 8,750,000 18 88
Issue of shares 5 September
2022 1.35 4,375,000 9 50
Issue of shares 5 September
2022 1.5 4,375,000 9 56
Issue of shares 13 September
2022 0.974 18,025,596 36 140
Issue of shares 13 September
2022 1.2 5,370,967 11 53
Issue of shares 13 September
2022 1.35 1,193,549 2 14
Issue of shares 13 September
2022 1.5 2,685,484 5 35
Issue of shares 16 September
2022 1 15,000,000 30 120
Issue of shares 16 September
2022 1.2 25,774,375 52 257
Issue of shares 16 September
2022 1.35 12,731,187 25 146
Issue of shares 16 September
2022 1.5 11,731,188 23 153
Issue of shares 23 September
2022 1.2 21,100,000 42 211
Issue of shares 23 September
2022 1.35 12,162,903 24 140
Issue of shares 23 September
2022 1.5 10,550,000 22 137
Less: Issuance of costs - - (512)
====== ==================== = =================== =
At 30 September 2022 2,764,264,264 5,529 38,708
On 4 November 2021, the Company agreed an extension of the
GBP1.4m Convertible Loan Note repayable on 17 April 2022 by a
further 12 months until 17 April 2023. The Note, which was
otherwise convertible at 1p per ordinary share from 17 February
2022, will now only be convertible at the earliest of 17 July 2022
representing a six month extension. Additionally, the Company
retains the right to repay the Note at any time with the additional
grant of warrants at 1.3p per share as detailed in the RNS of 20
April 2020. All other terms of the Note remain the same. In
consideration for this extension the Company shall issue and allot
to the Noteholder 11,200,000 ordinary shares.
On 5 November 2021, the company issued 115,384,611 ordinary
shares at 0.65 pence per share, raising gross proceeds of
GBP750,000.
On 4 February 2022, the company issued 175,000,000 ordinary
shares at a price 0.8 pence per share, raising gross proceeds of
GBP1,4000,000.
On 16 March 2022, the company issued 39,200,000 ordinary shares
at 0.8 pence per share. The shares were used to settle litigation
with a financial provider (not being the Company's broker or Nomad)
in dispute relating to the Saltfleetby Loan Facility.
On 11 April 2022, the company issued 61,363,634 ordinary shares
at 1.1 pence per share, raising gross proceeds of GBP675,000.
On 24 May 2022, the company issued 91,000,000 ordinary shares at
1.0989 pence per share. These were consideration shares paid for
the acquisition of Saltfleetby Energy Limited.
On 24 May 2022, and in relation to the acquisition of
Saltfleetby Energy Limited, the Company issued 546,000,000 ordinary
shares at 1.2 pence per share.
On 24 May 2022, and in relation to the acquisition of
Saltfleetby Energy Limited, the Company issued 273,000,000 ordinary
shares at 1.0989 pence per share, raising gross proceeds of
GBP3,000,000.
On 24 May 2022, the Company issued 5,000,000 ordinary shares at
0.9429 pence per share. The shares were issued to the Lenders or
their representatives in lieu of a cash facility fee pursuant to
the Company's Saltfleetby Loan Development Facility at or around
the first anniversary of the Loan Completion.
On 4 July 2022, and in relation to the acquisition of
Saltfleetby Energy Limited, the Company issued 273,000,000 ordinary
shares at 1.0989 pence per share, raising gross proceeds of
GBP3,000,000.
On 12 July 2022, the Company issued 27,300,000 ordinary shares
at 1.0989 pence per share. The shares were fee shares relating to
the Direct Subscription and acquisition of Saltfleetby Energy
Limited.
On 13 July 2022, the Company issued 5,803,226 ordinary shares at
varying exercise prices of exercise prices of 150,000 shares at 0.9
pence per share, 5,250,000 shares at 1 pence per share and 403,226
shares at 1 2 pence per share. They were issued in relation to an
exercise of Company Warrants.
On 5 September 2022, the Company issued 38,185,275 ordinary
shares at varying exercise prices of 3,461,538 shares at 0.65 pence
per share, 8,750,000 share at 0 8 pence per share, 5,405,555 shares
at 0.9 pence per share, 3,068,182 shares at 1.1 pence per share,
8,750,000 shares at 1.2 pence per share, 4,375,000 shares at 1 35
pence per share and 4,375,000 shares at 1 5 pence per share. They
were issued in relation to an exercise of Company Warrants.
On 13 September 2022 the Company issued 27,275,596 ordinary
shares at varying exercise prices of 18,025,596 shares at 0.974
pence per share, 5,370,967 share at 1.2 pence per share, 1,193,549
shares at 1 35 pence per share and 2,685,484 at 1 5 pence per
share. They were issued in relation to an exercise of Company
Warrants.
On 16 September 2022 the Company issued 65,236,750 ordinary
shares at varying exercise prices of 15,000,000 shares at 1 pence
per share, 25,774,375 shares at 1.2 pence per share, 12,731,187
shares at 1.35 pence per share and 11,731,188 shares at 1.5 pence
per share. They were issued in relation to an exercise of Company
Warrants.
On 28 September 2022 the Company issued 43,812,903 ordinary
shares at varying exercise prices of 21,100,000 shares at 1.2 pence
per share, 12,162,903 shares at 1.35 pence per share and 10,550,000
shares at 1.5 pence per share. They were issued in relation to an
exercise of Company Warrants.
As at 30 September 2022 the total issued ordinary shares of the
Company were 2,764,264,264 (2021: 966,502,268)
18. 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 2022, the following share options and warrants
were outstanding in respect of the Ordinary shares:
Outstanding
No. of and exercisable
options as at 30
Granted surrendered September
Outstanding during the during Exercised 2022
Exercise as at 01 year the year during the Final expiry
price Oct 2021 year dates
GBP0.06 16,850,892 - - - 16,850,892 13 Nov 2026
GBP0.09 1,050,000 - - - 1,050,000 13 Nov 2026
GBP0.068 2,469,914 - (2,469,914) - - 15 Feb 2022
GBP0.0425 3,541,235 - (3,541,235) - - 30 April 2022
GBP0.08 10,150,000 - (100,000) - 10,050,000 24 Aug 2028
GBP0.02 23,900,000 - (500,000) - 23,400,000 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
GBP0.015 26,000,000 - (750,000) - 25,250,000 31 Mar 2031
27 January
GBP0.012 75,000,000 - - (53,898,568) 21,101,432 2023
27 January
GBP0.0135 37,500,000 - - (26,712,639) 10,787,361 2023
27 January
GBP0.015 37,500,000 - - (25,591,672) 11,908,328 2023
GBP0.01 5,250,000 - - (5,250,000) - 9 April 2023
GBP0.012 7,500,000 - - (7,500,000) - 9 April 2023
GBP0.0135 3,750,000 - - (3,750,000) - 9 April 2023
GBP0.015 3,750,000 - - (3,750,000) - 9 April 2023
9 December
GBP0.0065 - 3,461,538 - (3,461,538) - 2023
4 February
GBP0.008 - 8,750,000 - (8,750,000) - 2025
GBP0.011 - 3,068,182 - (3,068,182) - 8 April 2025
GBP0.010989 - 173,100,000 - - 173,100,000 5 July 2027
------------ ------------- ------------ ------------- ------------- ---------------- --------------
Warrant 214,842,301 188,379,720 (6,011,149) (180,313,751) 216,897,121
Share
options 77,950,892 - (1,350,000) - 76,600,892
------------ ------------- ------------ ------------- ------------- ---------------- --------------
The weighted average exercise price of share options and
warrants was GBP0.01784 at 30 September 2022 (2021: GBP0.0334). The
weighted average remaining contractual life of options outstanding
at the end of the year was 3 years (2021:4 years). The weighted
average fair value of share option was GBP0.0128 (2021: GBP0.0148)
each on the grant date. The vesting criteria of the share options
are subject to share price growth reaching to the target level.
These fair values were calculated using the Black Scholes
warrant pricing model. The inputs into the model were as
follows:
Warrant Warrants Warrants Warrants
Stock price 0.68p 0.80p 1.23p 1.32p
Exercise price 0.65p 0.80p 1.10p 1.0989p
Interest rate 0.5% 0.5% 0.5% 0.5%
Volatility 30% 30% 30% 30%
Time to maturity 2 years 3 years 3 years 5 years
The Group recognised a share-based payment charge of
approximately GBP810,927 (2021: GBP182,000).
No options were exercised in both reporting year 2021 and 2022.
There are 180,313,751 Warrants exercised and 6,011,149 cancelled
during 2022. There remain 76,600,892 options and 216,897,121
warrants outstanding and exercisable as at 30 September 2022.
19. Reserves
2022 2021
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.
20. 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 2,764,264,263
ordinary shares are as follows:
2022 2021
GBP'000 GBP'000
Net loss attributable to equity holders
of the parent
company (111,947) (15,598)
================= ========
= = =
Weighted average number of basic
ordinary shares 1,648,593,936 875,710,640
================= ========
= = =
Basic EPS (in pence) (6.79) (1.78)
================= ========
= = =
The diluted loss per share is the same as the basic loss per
share as there were no dilutive potential ordinary shares
outstanding at the end of the reporting period.
21. Trade and other payables
2022 2021
Due within one year GBP'000 GBP'000
Trade payables 2,319 1,068
Convertible loan note 1,319 -
VAT payable - 22
Deferred consideration on Saltfleetby
Energy Limited acquisition 6,734 -
Lease liability 35 -
Accruals 62 231
Interest payable - loan 392 364
Other payables 293 289
- -- - -- -- - - -- -
-- -- - -- - -- -- -
-- -- -
-- -
11,154 1,974
=================== ===================
= =
Due after more than one year 2022 2021
GBP'000 GBP'000
Convertible loan note - 1,319
Lease liabilities 52 12
- -- - -- -- - -- - -- -
-- - -- - -- -- -
-- -- -
-- -
52 1,331
=================== ===================
= =
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. On 04 November 2022 the Company issued 11,200,000 shares in
respect of extending the Convertible Loan Note for another 12
months. The new maturity is 17 April 2023.
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.
On 24 May 2022, the Company executed a share purchase agreement
to acquire the entire issued share capital of Saltfleetby Energy
Limited from Forum Energy Services Limited, giving the Company 100%
ownership of the Saltfleetby Gas Field. The total effective
consideration payable pursuant to the SPA is the sum of
GBP14,052,000 of which up to GBP6,250,000 is deferred consideration
and GBP484,000 ,representing the debt free cash free amount, to be
paid in instalments from net cash payments to Angus Energy from the
Project through to 31 March 2025 (and subject to an upward or
downward net cash adjustment) as and when those payments would have
been available to Saltfleetby Energy Limited under the Company's
Senior Debt Facility of May 2021. It is expected that all material
payments with be paid within 12 months.
22. Provisions for other liabilities and charges
2022 2021
GBP'000 GBP'000
Abandonment costs
Balance b/fwd 3,007 3,007
Abandonment cost incurred through acquisition
of Saltfleetby Energy 1,225 -
Limited
Increase provision Lidsey & Brockham 125
Increase provision Balcombe 12
- -- - -- -- - -- -- - -- - - -- -
-- -- -
-- -- -
-- -
Balance c/fwd 4,369 3,007
=================== = ===================
=
The Group makes full provision for the future costs of
decommissioning oil and gas production facilities and pipelines on
the installation of those facilities. The amount provision is
expected to be incurred up to 2033 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.
23. Convertible loan
On 20 April 2020, the Company issued a 4% per annum GBP1,400,000
Convertible Loan Note to Knowe Properties Limited, a significant
shareholder in the Company. The 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.
On 20 October 2021, the Company agreed an extension of the
GBP1.4m Convertible Loan Note repayable on 17 April 2022 by a
further 12 months until 17 April 2023. The Note, which was
otherwise convertible at 1p per ordinary share from 17 February
2022, will now only be convertible at the earliest of 17 July 2022
representing a six month extension. Additionally, the Company
retains the right to repay the Note at any time with the additional
grant of warrants at 1.3p per share as detailed in the RNS of 20
April 2020. All other terms of the Note remain the same. In
consideration for this extension, the Company has issued and
allotted to the Noteholder 11,200,000 ordinary shares.
24. Loan Payable
On 17 May 2021, the Group signed a Loan Facility, conditional on
the setting of the hedge (see Note 25) and regulatory approval of
the royalty from the Oil and Gas Authority, between Angus Energy
and Saltfleetby Energy Limited and Mercuria Energy Trading Limited
and Aleph Saltfleetby Limited as the co-Lender. The term of the
Loan Facility provides for a four year amortisation loan facility
of up to GBP12 million with a 12% margin over LIBOR, a 3%
commitment fee payable out of the facility, a share granted of 30
million shares in Angus, issued over the life of the facility and
an override of 8% of gross revenue following the repayment of the
facility.
The GBP12 million facility was required for the re-development
of the Saltfleetby Gas Field and the drilling of the side-track
well in line with the Field Development Plan and the Plans for the
acceleration of production through the fast-tracking of the
side-track well.
2022 2021
Repayment date schedule were as follows: GBP'000 GBP'000
Current
30 September 2023 5,250 1,500
Non-Current
30 September 2023 - 4,200
30 September 2024 4,200 4,200
31 March 2025 2,100 2,100
Total Facility Loan GBP11,550 GBP12,000
25. Derivative Liability
On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3)
entered into a derivative agreement with Mercuria Energy Trading SA
(METS) under a Swap contract as part of the condition of the Loan
Facility (see Note 24). The derivative instrument was used to
mitigate price risk on the expected future cash flow from the
production of Saltfleetby Gas Field. Under the Swap contract, AWB3
will pay METS the floating price while METS will pay AWB3 the fixed
price on the sale of gas from the field.
Due to the delay in the production of the Saltfleetby field,
which further pushed the first gas production on 30 August 2022,
the hedge profile has been revised as at 30 September 2022 as shown
below:
Further details of the contract as at 30 September 2022
are as below:
Fixed price
Period of Gas Production Quantity in Therms in pence per
Therms
1-Sep- 2022 30-Sep- 22 843,750 0.4140
1-Oct- 22 31-Mar- 23 10,500,000 0.5205
1-Jan- 22 31-Mar- 23 843,750 4.3800
1-Apr- 23 30-Jun- 23 5,250,000 0.3755
1-Apr- 23 30-Jun- 23 843,750 3.1500
1-Jul- 23 30-Sep- 23 4,500,000 0.3755
1-Oct- 23 31-Mar- 24 9,000,000 0.4655
1-Apr- 24 30-Jun- 24 4,500,000 0.3560
1-Jul- 24 30-Sep- 24 3,750,000 0.3560
1-Oct- 24 31-Mar- 25 7,500,000 0.4500
1-Apr- 25 30-Jun- 25 3,750,000 0.3525
51,281,250
As of the reporting date, the expected cash flow on the sale of
natural gas amounted to GBP186.332m resulting in a loss of
GBP158.680m of which the Group has now recorded a 100% share on its
new working interest due to the acquisition of Saltfleetby Energy
Limited. The resulting loss on the Swap contract was a result of
the steep rise in the prices of natural gas affecting the Group as
the floating price payer as of reporting date.
The Group has recognized the gross liability at 100%, due to the
acquisition of Saltfleetby Energy Limited (SEL) with working
interest of 49% plus the Group's working interest of 51% prior to
acquiring SEL.
The cash flow forecast for the coming years on the on the
derivatives on the accompanying
consolidated financial position as of 30 September 2022
are:
Cash Flow of Derivative 30 Sep 30 Sep 30 Sep Total
Instruments 2023 2024 2025
GBP'000 GBP'000 GBP'000 GBP'000
Cash Inflow 15,829 7,127 4,697 27,653
Cash Outflow (102,412) (57,690) (26,231) (186,333)
Net Liability on Swap Contract (86,583) (50,563) (21,534) (158,680)
Specific valuation technique used to value the financial
instruments includes fair value measurement derived from inputs
other than quoted prices included within Level 1 of fair value
hierarchy valuation, that are observable for the instrument either
directly or indirectly (see accounting policy for Derivatives
Instrument).
The carrying value of the financial instrument approximates
their fair value and was valued using Level 2 fair value hierarchy
valuation. The fair value has been determined with reference to
commodity yield curves, as adjusted for liquidity and trading
volumes as at the reporting date supplied by the Group's derivative
partner, Mercuria Energy Trading. Management has carried out its
own valuation of the hedge using the same method. Future dated
market prices have been taken from the Heren Report dated 30
September 2022. This has resulted in a liability of GBP157.124m and
represents a 0.98% variance to Mercuria's calculation. Management
considered that the value provided by Mercuria Energy Trading best
represented the fair value of these arrangements as the forward
pricing curves did not take into account other market conditions.
This is a key estimate and has been disclosed in note 4.
The nature of these arrangements in the present environment is
such that material fluctuations in the value of the derivatives are
occurring on a daily basis. Wholesale gas prices have increased
substantially, but remain highly volatile, and as a result, the
loss on these contracts has also increased significantly.
The loss on these contracts at 30 September 2022 represents the
forecast spot-price value of the gas to be extracted against the
value fixed to be provided to the Group. Under projected gas
production volumes, these arrangements will fix the amount payable
to the group for the contracted volumes, with any excess of volume
being able to be sold at the available spot price.
In the event that the Group does not meet its production
timetable, the swaps will crystallise as a liability at the dates
at the proposed periods of gas production in the swap
agreements.
26. Financial instruments
The Group's principal financial instruments comprise cash and
cash equivalents, trade and other receivables, derivative
instruments 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:
Financial Financial Financial
Asset Liabilities Liabilities
at amortised at amortised at fair value
cost cost through profit
and
loss TOTAL
30 September 2022
Asset
Trade and other receivables 4,107 - - 4,107
Cash and cash equivalents 747 - - 747
Total financial assets 4,854 - - 4,854
Liabilities
Trade and other payable - 3,066 - 3,066
Deferred consideration
on acquisition of
Saltfleetby Energy Limited - 6,734 - 6,734
Convertible loan notes - 1,319 - 1,319
Lease liabilities - 87 - 87
Debt financing - 11,550 - 11,550
Derivative liability - 4,175 154,505 158,680
Total financial liabilities - 26,931 154,505 181,436
Financial Financial Financial
Asset at Liabilities Liabilities
amortised at amortised at fair value
cost cost through profit
and
loss TOTAL
30 September 2021
Asset
Trade and other receivables 16,429 - - 16,429
Cash and cash equivalents 6,160 - - 6,160
Total financial assets 22,589 - - 22,589
Liabilities
Trade and other payable - 1,068 - 1, 068
Convertible loan notes - 1,319 - 1,319
Lease liabilities - 12 - 12
Debt Financing - 12,000 12,000
Derivative Liability - 25,770 25,770
Total financial liabilities - 14,399 25,770 40,169
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 15, the Group
recognised an impairment provision of GBP104,000 in 2021 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, loan
facility and amount owed by related parties. 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.
Interest rate sensitivity
The following table demonstrates the sensitivity to reasonably
possible changes in the interest add-on rate for the GBP12 million
loan with the principal interest rate held constant at 12%. (Also
see Note 24). The add-on- interest rate is linked to SONIA
(Sterling Over Night Indexed Average) and based on September 2022
average of 1.85% it had an immaterial impact of GBP200.
Increase / (decrease)
Increase/decrease in add-on Interest 30 September
rate
2022 2021
GBP GBP
+ 10% 22 -
- -- - -- -- - -- -
- -- -- - -- -- -- -
- -- -- -
-- -
- 10% (22) -
- -- - -- -- - -- -
- -- -- - -- -- -- -
- -- -- -
-- -
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 regarding oil sales are denominated in US Dollars.
The Group has bank accounts in US Dollars to mitigate against the
exchange risks. At 30 September 2022, the GBP cash balance held
denominated in USD was GBP19,869 (2021; GBP34,733).
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:
2022 2021
GBP'000 GBP'000
Trade and other payable
Within one month 454 617
Within two to three months 2,612 1.357
Within four to twelve months 8,088 -
- -- - -- -- - -- - -- -
-- - -- - -- -- -
-- -- -
-- -
11,154 1,974
=================== ===================
= =
2022 2021
GBP'000 GBP'000
Lease liabilities
Within one month - -
Within two to three months - -
Within four to six months 35 -
Within six to twelve months - -
More than twelve months 52 12
- -- - -- -- - -- - -- -
-- - -- - -- -- -
-- -- -
-- -
87 12
=================== ===================
= =
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing
market commodity prices of oil and gas products it produces. The
table below summarised 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 and
natural gas prices move 10% resulting in a change of US$10/bbl for
crude oil and GBP 0.24/Therm for natural gas sales for 2022, 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 in crude Increase / (decrease) in profit
oil prices before tax for the year ended
30 September
2022 2021
GBP'000 GBP'000
Average spot price increased
by 10% 11 -
- -- - -- -- - -- -- - -- -
- -- - -- -- -
-- -- -
-- -
Average spot price decreased
by 10% (11) -
- -- - -- -- - -- -- - -- -
- -- - -- -- -
-- -- -
-- -
Increase / (decrease) in profit
Increase/decrease in gas prices before tax for the year ended
30 September
2022 2021
GBP'000 GBP'000
Average spot price increased by
10% 306 -
- -- - -- -- - -- -- - - -- - --
-- - -- - -- --
- -- -
Average spot price decreased by
10% (306) -
- -- - -- -- - -- -- - - -- - --
-- - -- - -- --
- -- -
27. Net debts reconciliation
The below table sets out an analysis of net debt and the
movement in net debt for the years presented
2022 2021
GBP'000 GBP'000
Cash and cash
equivalent 747 6,160
Convertible
loan note
(note 23) (1,433) (1,433)
Loan payable
(note 24) (11,550) (12,000)
Deferred
consideration (6,734) -
on
Saltfleetby
Energy
Limited
acquisition
- -- - -- -- - - -- -
-- -- - -- - -- -- -
-- -- -
-- -
Net debt (18,970) (7,273)
================================================== ==================================================
Cash and Convertible Facility Deferred Total
cash equivalents loan note Loan consideration
on acquisition
of SEL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net debt as at 1 October
2020 1,852 (1,377) - 475
Cash flow (9,818) - - (9,818)
Issue of new equity
(net proceeds) 2,126 - - 2,126
Interest on convertible
loan note - (56) - (56)
Facility Loan 12,000 (12,000)
Net debt as at 30 September
2021 6,160 (1,433) (12,000) (7,273)
Net debt as at 1 October
2021 6,160 (1,433) (12,000) (7,273)
Cash flow (15,427) - - (15,427)
Issue of new equity
(net proceeds) 10,464 - - 10,464
Saltfleetby acquisition
cost - - - (6,734) (6,734)
Facility Loan repayment (450) - 450 -
Net debt as at 30
September 2022 747 (1,433) (11,550) (6,734) (18,970)
28. Lease asset 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.
As at 30 September
2022 2021
GBP'000 GBP'000
Leased assets
Balance 11 35
New leases in the year - discounted 97 -
Depreciation charged (27) (24)
- -- - -- -- - -- - -- -
-- - -- - -- -- -
-- -- -
-- -
Total 81 11
=================== ===================
= =
The maturity of the lease liability are as follows:
As at 30 September
2022 2021
GBP'000 GBP'000
Leased liabilities
Balance 12 35
New Leases in the year 105 -
Payments (30) (23)
- -- - -- -- - -- -
- -- -- - -- -- -- -
- -- -- -
-- -
Total 87 12
Leases which expire:
Not later than one year 35 -
Later than one year and not later than
five years 52 12
More than five years - -
- -- - -- -- - -- -
- -- -- - -- -- -- -
- -- -- -
-- -
Total 87 12
=================== ===================
= =
29. Commitments
At 30 September 2022, the Group had contractual a capital
commitments of GBP0.245m (2021 GBP2.973m) in
respect to the Group's Saltfleetby development activities.
30. Acquisition of Saltfleetby Energy Limited
In 24 May 2022, the Group has executed a Share and Purchase
Agreement (SPA) with Forum Energy Service Limited to acquire the
entire issued capital of Saltfleetby Energy Limited which owns the
49% working interest and the sole project partner in one of the key
asset of the Company which is the Saltfleetby Gas Field, thereby
giving the Company a 100% interest in the project.
The total effective consideration payable pursuant to the SPA is
the sum of GBP14,052,000 which comprise of the following:
-- GBP250,000 to be paid in cash at Completion;
-- the issue of 91 million Ordinary Shares at 1.09896011 pence
per share (the "Funding Price") at Completion (the "Initial
Consideration Shares");
-- the issue and allotment of the 546,000,000 Ordinary Shares at
a price of 1.2 pence per Ordinary Share (the ("Acquisition Price")
at Completion (the "Additional Consideration Shares"); and
-- up to GBP6,250,000 deferred consideration to be paid in
instalments from net cash payments to Angus Energy from the Project
through to 31 March 2025.
On the acquisition date, Saltfleetby Energy Limited has net
asset value of GBP12.581m before its share in Derivative Liability
of the hedging instrument valued at GBP35.228m on its 49% share as
a partner.
The net asset comprises of Saltfleetby production asset valued
at GBP15.951m, fixed asset at GBP.015m and a total receivable of
GBP2.348m while being adjusted with payables consisting of a
project related provision for plug and abandonment of the field at
GBP1.225m and payables at GBP4.508m wherein GBP3.566m is being owed
to a subsidiary of the Company, Angus Energy Wield Basin no. 3 and
a project related cost.
The Derivative Liability is also considered a related liability
arising from the hedging of gas sales and further discussed in Note
25.
The management believes that such opportunity has arisen and
being advantageous to the company to consolidate the partners' 49%
holdings on the asset which provides a significant discount to the
valuation of the Saltfleetby Gas Field while also considering the
project's progress which is at its excellent status with all major
equipment already on site and other components in place, and with
an expectation of its First Gas towards the third quarter of the
current year.
31. Related Party transactions
Amounts due at the year end to Forum Energy Services Limited is
GBP6,734,000 (see note 21). Forum Energy Services Limited is a
related party by virtue of Paul Forrest joining the board of Angus
Energy Plc on 18 July 2022 and being the majority of Forum Energy
Services Limited.
32. Subsequent events
On 13 October 2022, the Company issued 127,400,127 ordinary
shares at 1.0989 pence per share. They were issued in relation to
the exercise of Company Warrants.
On 24 October 2022, the Company agreed the grant of 165.5
million share options under the Company's existing Employee
Incentive Scheme to Directors and other staff. The share options
have an exercise price of 2 pence per share (being a premium of 23%
to the closing price on 21 October 2022) and vest as to 100 per
cent., upon the closing mid--market price of the Ordinary Shares
being 3 pence or above (being 50 per cent. above the Exercise
Price. The options have a 4 year term from the date of issue.
On 28 October 2022, the Company issued 10,193,759 ordinary
shares at varying prices of 9,100,009 shares at 1.0989 pence per
share, 546,875 shares at 1.2 pence per share, 273,437 shares at
1.35 pence per share and 273,437 shares 1.5 pence per share. They
were issued in relation to the exercise of Company Warrants.
On 02 November 2022, the Company issued 36,599,864 ordinary
shares at 1.0989 pence per share. They were issued in relation to
the exercise of Company Warrants.
On 21 November 2022, the Company issued 312,000 ordinary shares
at varying prices of 156,000 shares at
1.35 pence per share and 156,000 shares at 1.5 pence per share.
They were issued in relation to the exercise of Company
Warrants.
On 19 December 2022 the Company announced that it had
successfully raised gross proceeds of approximately GBP7 million by
means of a placing to certain institutional and other investors to
raise approximately GBP2 million, (the "Placing") and a direct
subscription to raise approximately GBP5 million (the
"Subscription") (together, the "Fundraising"), in each case at a
price of 1.65 pence per share (the "Fundraising Price").
The Fundraising was conducted in two tranches, with the initial
tranche of new Ordinary Shares under the Fundraising (comprising in
aggregate 341,219,000 Ordinary Shares, being the shares issued
under the Placing and 226,219,000 shares issued under the
Subscription) being issued under the Company's pre-existing share
capital authorities, and the second tranche of 89,781,000 new
Ordinary Shares ("Conditional Subscription"), together with
311,250,000 warrants in respect of the entire Fundraising
("Warrants"), being subject to shareholders passing the certain
resolutions ("Resolutions") at a General Meeting ("GM").
In addition, and conditional upon the passing of the
Resolutions, Forum Energy Services Ltd ("Forum") has agreed to
accept the allotment and issue of 60,606,061 new Ordinary Shares
(the "Forum Share Issue") at the Fundraising Price (together with
the issue of 30,303,030 warrants on the same basis as applicable to
the Fundraising ("Forum Warrants")) in settlement of the Company's
obligation to pay certain deferred consideration of GBP1,000,000 to
Forum in accordance with the Saltfleetby SPA as announced on 24 May
2022.
As announced on 2 March 2023, the Board resolved to make the
following changes, subject to final terms being agreed:
Richard Herbert has agreed to assume the role of Chief Executive
Officer in charge of day to day management of the Company and
responsibility for the ongoing development of the management team.
Richard's background at the helm of independent oil and gas
companies, such as Frontera Energy, combined with his experience as
Head of Exploration at BP, his particular experience in the UK
onshore makes him the ideal candidate for strengthening the
execution of the Company's strategy. George Lucan will take up the
role of Executive Chairman with particular responsibility for
stakeholder and governmental relations and strategic direction.
Andrew Hollis will remain Technical Director of the Company but
will be stepping down from his Board responsibilities. Paddy
Clanwilliam will step down as Non-Executive Chairman to become
Senior Independent Non-Executive Director, alongside Krzysztof
Zielicki, who remains our second Independent Non- Executive
Director.
2022 2021
Note GBP'000 GBP'000
ASSETS
Non-current assets
Investment 5 38,632 15,336
Total non-current assets 38,632 15,336
--------
Current assets
Trade and other receivables 6 207 101
Cash and cash equivalents 534 26
--------
Total current assets 741 127
--------
TOTAL ASSETS 39,373 15,463
EQUITY
Equity attributable to owners
of the parent:
Share capital 8 5,529 1,933
Share premium 8 38,708 23,605
Merger relief reserve 8 1,500 1,500
Loan note reserves 106 106
Accumulated loss (14,719) (13,362)
--------
TOTAL EQUITY 31,124 13,782
Current liabilities
Trade and other payables 7 8,249 362
--------
Total current liabilities 8,249 362
--------
Non-current liabilities
Trade and other payables 7 - 1,319
--------
Total non-current liabilities - 1,319
--------
TOTAL LIABILITIES 8,249 1,681
TOTAL EQUITY AND LIABILITIES 39,373 15,463
The loss for the Company for the year ended 30 September 2022
was GBP2,168,000 (2021: GBP1,362,000) The note on page 81 to 84
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 Loan
Share Share relief note Accumulated Total
capital premium reserve reserves loss equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October 2020 1,430 21,982 1,500 106 (12,182) 12,836
Loss for the year -- -- - (1,362) (1,362)
Total comprehensive income
for the year - -- - (1,362) (1,362)
Transaction with owners
Issue of shares 503 1,770 -- - 2,273
Less: issuance costs -- (147) -- -- (147)
Grant of share options -- -- -- - 182 182
Balance at 30 September
2021 1,933 23,605 1,500 106 (13,362) 13,782
Loss for the year -- -- - (2,168) (2,168)
Total comprehensive income
for the year - - - (2,168) (2,168)
Transaction with owners
Issue of shares 3,596 15,615 -- - 19,211
Less: issuance costs -- (512) -- - (512)
Grant of share options -- -- -- 811 811
Balance at 30 September
2022 5,529 38,708 1,500 106 (14,719) 31,124
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 81 to 84 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 GBP2,168,000 (2021:
GBP1,362,000).
4. Staff costs
There are four employees and five directors 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.
Cost of Loan to
investment group Total
undertakings
GBP'000 GBP'000 GBP'000
At 1 October 2020 228 12,602 12,830
Movement of the
intercompany loan for
the year - 2,506 2,506
- - - -- -- - -- -- - - -- - -- - -- -
-- - -- - -- -- -- -- -
- -- - -- -- -
-- -
At 30 September 2021 228 15,108 15,336
Movements of the
intercompany loan for
the year - 7,844 7,844
Saltfleetby Energy
Limited investment 15,452 - 15,452
- - - -- -- - -- -- - - -- - -- - -- -
-- - -- - -- -- -- -- -
- -- - -- -- -
-- -
At 30 September 2022 15,680 22,952 38,632
=================== = =================== ===================
= =
Investment
The details of the subsidiary are set out in the note 13 to the
consolidated financial statements.
On 24 May 2022, the Company executed a share purchase agreement
to acquire the entire issued share capital of Saltfleetby Energy
Limited from Forum Energy Services Limited, giving the Company 100%
ownership of the Saltfleetby Gas Field.
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, which 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
2022 2021
GBP'000 GBP'000
Other receivables 207 101
- -- - -- -- - -- -- - -- - --
- -- - -- - --
-- - --
-
207 101
=================== ===================
= =
7. Trade and other payables
2022 2021
GBP'000 GBP'000
Trade payables 114 121
Convertible loan note 1,319 -
Deferred consideration on acquisition
of 6,734 -
Saltfleetby Energy Limited
Amounts due to group undertakings - 100
Other taxation 20 45
Other payables 62 96
- -- - -- -- - - -- - --
-- -- - -- - -- - --
-- - --
-
8,249 362
=================== ===================
= =
The carrying amount of trade and other payables approximates to
their fair value.
2022 2021
Due after more than one year GBP'000 GBP'000
Convertible loan note - 1,319
==================== ==================================
= ==================== =
8. Share capital
The movement of share capital are set out in the note 17 to the
consolidated financial statements.
As at 30 September 2022 the total issued ordinary shares of the
Company were 2,764,264,264 (2021 -
966,502,268).
9. Related Party transactions
Amounts due at the year end to Forum Energy Services Limited is
GBP6,734,000 (see note 21). Forum Energy Services Limited is a
related party by virtue of Paul Forrest joining the board of Angus
Energy Plc on 18 July 2022 and being the majority of Forum Energy
Services Limited.
10. Subsequent events
On 13 October 2022, the Company issued 127,400,127 ordinary
shares at 1.0989 pence per share. There were issued in relation of
exercise of the Company Warrants.
On 24 October 2022, the Company agreed the grant of 165.5
million share options under the Company's existing Employee
Incentive Scheme to Directors and other staff. The share options
have an exercise price of 2 pence per share (being a premium of 23%
to the closing price on 21 October 2022) and vest
as to 100 per cent., upon the closing mid--market price of the
Ordinary Shares being 3 pence or above
(being 50 per cent. above the Exercise Price. The options have a
4 year term from the date of issue.
On 28 October 2022, the Company issued 10,193,759 ordinary
shares at varying prices of 9,100,009 shares at 1.0989 pence per
share, 546,875 shares at 1.2 pence per share, 273,437 shares at
1.35 pence per share and 273,437 shares 1.5 pence per share. There
were issued in relation of exercise of the Company Warrants.
On 02 November 2022, the Company issued 36,599,864 ordinary
shares at 1.0989 pence per share. There were issued in relation of
exercise of the Company Warrants.
On 21 November 2022, the Company issued 312,000 ordinary shares
at varying prices of 156,000 shares at 1.35 pence per share and
156,000 shares at 1.5 pence per share. There were issued in
relation of exercise of the Company Warrants.
On 8 December 2022, the Company issued 500,000 ordinary shares
at varying prices of 250,000 shares at 1.2 pence, 125,000 at 1.35
pence per share and 125,000 shares at 1.5 pence per share. There
were issued in relation of exercise of the Company Warrants.
On 19 December 2022 the Company announced that it had
successfully raised gross proceeds of approximately GBP7 million by
means of a placing to certain institutional and other investors to
raise approximately GBP2 million, (the "Placing") and a direct
subscription to raise approximately GBP5 million (the
"Subscription") (together, the "Fundraising"), in each case at a
price of 1.65 pence per share (the "Fundraising Price").
The Fundraising was conducted in two tranches, with the initial
tranche of new Ordinary Shares under the Fundraising (comprising in
aggregate 341,219,000 Ordinary Shares, being the shares issued
under the Placing and 226,219,000 shares issued under the
Subscription) being issued under the Company's pre-existing share
capital authorities, and the second tranche of 89,781,000 new
Ordinary Shares ("Conditional Subscription"), together with
311,250,000 warrants in respect of the entire Fundraising
("Warrants"), being subject to shareholders passing the certain
resolutions ("Resolutions") at a General Meeting ("GM").
In addition, and conditional upon the passing of the
Resolutions, Forum Energy Services Ltd ("Forum") has agreed to
accept the allotment and issue of 60,606,061 new Ordinary Shares
(the "Forum Share Issue") at the Fundraising Price (together with
the issue of 30,303,030 warrants on the same basis as applicable to
the Fundraising ("Forum Warrants") in settlement of the Company's
obligation to pay certain deferred consideration of GBP1,000,000 to
Forum in accordance with the Saltfleetby SPA as announced on 24 May
2022.
As announced on 2 March 2023, the Board resolved to make the
following changes, subject to final terms being agreed:
Richard Herbert has agreed to assume the role of Chief Executive
Officer in charge of day to day management of the Company and
responsibility for the ongoing development of the management team.
Richard's background at the helm of independent oil and gas
companies, such as Frontera Energy, combined with his experience as
Head of Exploration at BP, his particular experience in the UK
onshore makes him the ideal candidate for strengthening the
execution of the Company's strategy. George Lucan will take up the
role of Executive Chairman with particular responsibility for
stakeholder and governmental relations and strategic direction.
Andrew Hollis will remain Technical Director of the Company but
will be stepping down from his Board responsibilities. Paddy
Clanwilliam will step down as Non-Executive Chairman to become
Senior Independent Non-Executive Director, alongside Krzysztof
Zielicki, who remains our second Independent Non-Executive
Director.
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END
FR JRMRTMTTMBAJ
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