TIDMSCIR
RNS Number : 7177B
Scirocco Energy PLC
14 June 2021
14 June 2021
Scirocco Energy plc
("Scirocco Energy" of "the Company")
Full-Year Results 2020 and Notice of AGM
Scirocco Energy (AIM: SCIR), the AIM investing Company targeting
attractive production and development opportunities within the
European energy market, is pleased to announce its audited annual
results for the period ended 31 December 2020. The Company is today
posting its Annual Report and Accounts to those Shareholders that
have elected to receive it by post, along with the Notice of AGM.
Both documents will be made available on the website shortly.
Period and Post-Period Highlights
-- In April 2020, the Joint Venture for the Ruvuma asset
received the extension of the Mtwara Licence in respect to the
Ntorya Location from the Ministry of Energy of Tanzania
-- In June 2020, the Company entered into an investment facility
for up to US$5,000,000 with Prolific Basins LLC
-- In November 2020, Aminex plc announced that it had completed
the farm-out of 50% of its ownership interest in the Ruvuma PSA to
ARA Petroleum Tanzania Limited ("APT"); consequently APT have
assumed the role of operator under the Ruvuma PSA
-- Continued focus on cost discipline, including salary
sacrifices and implementation of option based remuneration for
Executives
-- Completed the name change and rebrand to Scirocco Energy plc
-- Helium One successfully completed its admission to trading on
AIM ("Admission"), at the point of Admission, Scirocco held
21,297,388 shares in Helium One, which represented an interest of
c.4.6% in the share capital, and 1 million share options
-- Continued with the formal process to explore value
realisation for its assets in Tanzania with encouraging level of
interest
-- In February 2021, Scirocco Energy announced the further
development in its strategic focus, identifying various near-term
investment opportunities within the low-carbon space, including
renewable energy, circular economy and energy storage and
transfer
-- To support the augmented strategy, with an increased focus
within the low-carbon space, the Company appointed Mr. Muir Miller
as an Independent Non-Executive Director, adding specialist
experience to support this strategy development as Scirocco Energy
moved into the execution phase
-- Today, the Company also announced its proposed investment in
Energy Acquisitions Group Ltd ("EAG"), a specialist acquisition and
operating vehicle in the sustainable energy sector. The investment
in conditional on shareholder approval for a change in the
Company's investing policy, which is being sought at the Company's
upcoming Annual General Meeting.
The Company's Annual General Meeting ("AGM") will be held at 2
p.m. BST on 9 July at The Bonham Hotel, 35 Drumsheugh Gardens,
Edinburgh EH3 7RN.
The Board continues to monitor the COVID-19 situation and the UK
Government's guidance on social distancing and public gatherings at
annual general meetings. The Board recognises that the Annual
General Meeting typically represents an opportunity to engage with
members and provides a forum that enables members to ask questions
of, and speak with, the Board. Our preference would be to welcome
shareholders in person to our 2021 Annual General Meeting,
particularly given the constraints we faced in 2020 due to the
COVID-19 pandemic.
However, at present there are restrictions placed on the amount
of people who can gather indoors. Although there is some
flexibility for people gathering in a workplace, the Annual General
Meeting does not fall into this category under current government
guidelines. We are therefore currently proposing to hold the Annual
General Meeting with the minimum attendance required to form a
quorum with access to the venue for other non-essential attendees
being restricted. Shareholders are strongly requested not to attend
the meeting in person and Shareholders or others attempting to
attend the Annual General Meeting in person may not be permitted
entry. Shareholders are strongly encouraged to therefore submit
their votes on all resolutions as early as possible by returning
the Form of Proxy included with this Circular, or transmitting a
CREST Proxy Instruction (if applicable), appointing the 'Chair of
the Meeting' as their proxy.
To be valid, Forms of Proxy should be completed, signed and
returned so as to be received by the Company's registrars, Share
Registrars Limited, at The Courtyard, 17 West Street, Farnham,
Surrey, GU9 7DR, as soon as possible, but in any event so as to be
received not later than 48 hours (excluding non-working days)
before the time of the Annual General Meeting, being 2 p.m. on 9
July 2021. Please refer to the detailed notes contained in the
Notice of Annual General Meeting and the Form of Proxy.
If you hold your Ordinary Shares in uncertificated form you may
appoint a proxy by completing and transmitting a CREST Proxy
Instruction in accordance with the procedures set out in the CREST
Manual so that it is received by the Registrars (under CREST
Participation ID 7RA36 by no later than 2 p.m. on 7 July 2021. The
time of receipt will be taken to be the time from which the
registrar is able to retrieve the message by enquiry to CREST in
the manner prescribed by CREST.
Given the constantly evolving nature of the situation, should
the circumstances change before the time of the Annual General
Meeting, we want to ensure that, to the extent that it is
reasonable and practicable to do so, we are able to adapt
arrangements and to welcome shareholders to the Annual General
Meeting, within safety constraints and in accordance with
government guidelines. We will notify shareholders of any change as
early as possible before the date of the Annual General Meeting.
Any updates to the position will be included on our website (
https://www.sciroccoenergy.com/ ) and by RNS announcement.
Tom Reynolds CEO commented: ""Over the past year we have
progressed our transition as a Company as we formally became
Scirocco Energy. While we continue to look at value realisation
options for our Tanzanian assets and benefitted from enhanced value
from our shareholding in Helium One, it is the recent post-year
highlights that reflect our strategic direction of travel. Through
our investment in EAG and subsequent transaction in the Anaerobic
Digestion space, we are now well positioned to take advantage of
the growing opportunity in the sustainable energy sector. This
initial investment, while relatively small, provides a springboard
for further near-term growth in the broader renewables environment.
We would like to thank shareholders for their patience through this
transitional period and look forward to a busy year ahead as we
progress our various operational and corporate initiatives."
For further information:
Scirocco Energy plc
Tom Reynolds, CEO +44 (0) 20 7466
Doug Rycroft, COO 5000
Strand Hanson Limited, Nominated Adviser +44 (0) 20 7409
James Spinney / Ritchie Balmer / Rory Murphy 3494
WH Ireland Limited, Broker +44 (0) 0207 220
Harry Ansell / Katy Mitchell 1666
Buchanan, Financial PR +44 (0) 20 7466
Ben Romney / Kelsey Traynor / James Husband 5000
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
CHAIRMAN'S STATEMENT INCORPORATING THE STRATEGIC REPORT
FOR THE YEARED 31 DECEMBER 2020
On behalf of the Board of Directors, I hereby present the financial
statements of Scirocco Energy plc (the "Company") for the year ended
31 December 2020.
2020 was a challenging year for all companies in the energy sector
regardless of size. That being said, it was another year of transition
for our Company as we completed our transformation into Scirocco
Energy and continued to make headway with our core assets and new
strategy. In my capacity as Non-Executive Chairman of the Company,
I am pleased to provide a review of the financial year for 2020,
as well as the outlook for 2021. I would also like to take this opportunity
to thank shareholders for their patience as we implement a refreshed
strategy in a difficult environment.
Market Environment
It cannot be overstated how challenging the market backdrop was through
2020. The level of disruption and uncertainty caused by COVID-19,
together with a significant drop in both demand and pricing in the
oil and gas sector, has resulted in a period of unprecedented change.
The small cap E&P environment was already facing numerous challenges
in terms of access to capital and a seismic shift in investor sentiment,
and this was undoubtedly exacerbated by the issues caused by the
pandemic. The uncertain outlook and severe commodity pricing volatility
created challenges in transacting as appetite for new ventures diminished
and valuation expectations differed between vendors and acquirers.
At the same time this changing landscape and structural overhaul
of the global energy mix is creating new opportunities for those
willing to transform. It has forced companies to think differently
about the future of energy, with many seeing this as an inflection
point for companies in this sector to embrace change and be part
of the energy transition; something Scirocco had already identified
as a key part of its future.
Strategy and Portfolio
The Board's early decision in 2020 to augment the new strategy and
to invest in the broader European Energy Market was prescient, with
a significant amount of work being put into identifying potential
investment opportunities through 2020. In doing so we have developed
some important new relationships and prospective partnerships which
will be key to the future of the Company.
The year started with the decision to not progress with the ONE Dyas
transaction, which although disappointing at the time, given the
subsequent events in the sector, we remain convinced that this was
the right decision both then and now. During this period, the Board
also made the decision to implement cost discipline and cash management
strategies which were maintained throughout the year. This was part
of a wider focus to continue the development of the Company's governance
structures and policies so as to ensure that they are in place to
support the growth plan.
It was the second half of the year that saw progress of the portfolio
and further implementation of the strategy. In June, the Company
announced it had secured an appropriate funding structure through
the investment facility ("Facility"), with Prolific Basins LLC, a
US based specialist energy investor which created optionality for
financing. Although we have only drawn down a limited portion of
the Facility, it has been key to ensuring that we can fund our position
in Ruvuma and at same time allow time to secure the best deal through
the sale process.
Q4 was in particular a strong quarter to end the year, with significant
developments in our portfolio of assets. In October, Aminex ("AEX")
announced that it had completed the farmout of 50% of its ownership
in the Ruvuma PSC to ARA Petroleum Tanzania ("APT"). This cleared
an important obstacle to progress and at the same time provides further
validation for the valuation that we consider appropriate. While
our sales review of Tanzanian assets had commenced much earlier in
the year, it was only upon completion of AEX/APT transaction that
we began to progress commercial discussions, and this dialogue continues
with a number of interested parties. In a short amount of time following
the change of ownership and operatorship, ARA has moved swiftly to
seek approval of a work program and budget to acquire a 400 sq km
3D survey. In parallel, APT announced the contracting and procurement
of the services for the drilling of the Chikumbi-1 well. That well
is a material value catalyst for the Ruvuma JV, and our involvement
in it depends on the outcome of the ongoing discussions with potential
suitors.
In November, Helium One Global Limited merged with the cash shell
of Attis Oil & Gas to form an enlarged entity called Helium One on
AIM, of which Scirocco Energy owned 4.3% at the time of the IPO.
Helium One has identified a globally unique, large scale primary
helium project in Tanzania called the Rukwa Project, which has strategic
global implications in resolving the supply-constrained helium market.
The listing on AIM provides Scirocco with a liquidity platform to
monetise this legacy investment at the appropriate time. The stock
has performed well since its listing and we will continue to assess
its progress in line with our own monetization objectives.
Through the period, the Company continued to also look for acquisitions
or investments that would fit the new strategy focused on the energy
transition and were able to provide updates in the period post year-end.
The screening process has been intense, despite the challenges caused
by the pandemic, and we continue to progress a number of interesting
opportunities.
In February 2021, the Company was able to provide further updates
of its strategy as it looks to focus on near-term investment opportunities
in the low-carbon space focused on three asset classes; renewable
energy, circular economy and energy storage and transfer. By constructing
a portfolio within this space and with well defined investment criteria,
the Board believes it will offer shareholders and investors exposure
to cash generative investments with an attractive risk/reward ratio
within the sustainable energy ecosystem and the ability to deliver
shareholder value through dividends and capital growth. If we have
seen anything in 2020, it was a catalyst year in terms of a move
away from traditional fossil fuels, and the Board believes the Company
is well positioned to now focus on these new investment channels
for a sustainable future.
As part of this development in the strategy, we also announced the
appointment of Mr Muir Miller to the Board on 18 March 2021. Muir
brings a wealth of skills and experience in the low carbon sector.
He is already making a significant contribution to the way we are
approaching investment in the transition energy space.
Prior year adjustments
In the current year, there has been an adjustment to the figures
previously reported in 2-019. The investment in Corallian Energy
Limited was incorrectly classifed as an intangible asset and has
subsequently been reclassified as an unquoted equity investment.
Details of this can be found in note 30.
Outlook
The Company is fully committed to the new strategy and has already
identified a number of opportunities within its new area of focus
with a target to deliver an invested asset base of GBP150 million
capable of generating cash flow of circa GBP20 million per annum
within five years. The announcement of the EAG deal and Greenan acquisition
in June is an important first step into the transition energy space
and specifically the Anaerobic Digestion sector, more commonly known
as biogas or "AD". It is indicative of the type of opportunity we
are pursuing. It provides a solid foundation on which to build and
the Board and Management look forward to explaining more about this
deal and to updating shareholders on progress with other transactions
throughout the year.
With regards to the existing portfolio, we remain very confident
of the commercial attractiveness of the legacy investments in Tanzania
and believe that we are on the cusp of further positive developments
this year. The new operator is developing a work programme which
will optimise the value of resources at Ruvuma. We believe this will
offer an attractive development project to a prospective buyer of
the Scirocco interest. I would like to assure shareholders that we
continue to strive to secure the best possible value for our interests
based on the market dynamics and we look forward to updating shareholders
in due course.
The portfolio review has also progressed with the divestment of our
stake in Reef Resources which was announced in March.
Section 172 (1) Statement
The Company was admitted to the AIM Market of the London Stock Exchange
on 12 April 2007 and has been a public company from this date. The
Company is required to provide a Section 172(1) statement under the
terms of its AIM listing. This disclosure aims to describe how the
Directors have acted to promote the success of the company for the
benefit of its members as a whole, taking into account (amongst other
matters) the matters set out in section 172(1)(a) to (f) of the Companies
Act which are set out below.
(a) the likely consequences of any decision in the long term
As previously discussed, the deal with ONE DYAS did not go through
in the current year. The Company has not made any other decisions
which will likely affect the company in the long term in the current
financial year.
(b) the interests of the company's employees
Aside from the Directors, the Company does not have any other employees.
(c) the need to foster the company's business relationships with
suppliers, customers and others
Aside from a small number of service providers, the success of the
Company's investment strategy will be driven in part by the business
relationships that exist between the Directors and the management
of other oil and gas companies and as such the maintenance of such
relationships is given a very high priority by the Directors.
(d)the impact of the company's operations on the community and the
environment
During the current investment phase the Company has no operations.
The Directors are nevertheless cognisant of the potential impact
of future investments on affected communities and the environment
and such factors will continue to be considered as part of investment
appraisal and decision making.
(e) the desirability of the company maintaining a reputation for
high standards of business conduct
The Company's standing and reputation with other oil and gas companies,
equity investors, providers of debt, advisers and the relevant authorities
are key in the Company achieving its investment objectives and the
Company's ethics and behaviour, as summarised in the Company's Business
Principle and Ethics, will continue to be central to the conduct
of the Directors. The Company is advised by blue-chip experienced
advisers which also assist in maintaining high standards of conduct.
(f) the need to act fairly as between members of the company
The Directors will continue to act fairly between the members of
the Company as required under the Companies Act, the AIM Rules and
QCA corporate governance principles.
Conclusion
In summary although our progress this year was significantly affected
by external events, we believe that 2020 will prove to be a definitive
inflection point for both the Company and the energy sector in general.
It feels like there has been a generational shift in thinking which
is going to lead to significant changes and opportunities in the
transition of the energy sector. The companies that recognize this
and move quickly to transform will be the beneficiaries, and the
Board feels that Scirocco is already well down this path and will
benefit from forward thinking and early mover advantage.
I can re-assure our shareholders that the transformation within the
company is well underway and believe the change of name to Scirocco
Energy at the AGM in 2020 was well timed. It is both symbolic and
indicative of where we would like to take the Company, and see our
repositioning in the last couple of years as essential strategic
events that will benefit the Company in the near-term and beyond.
The Board is excited and fully engaged in the transformation to the
transition energy space.
We see significant opportunities for value creation for a company
with the right strategy, the right partners and focused on the right
opportunities. We remain convinced that the future lies in the low
carbon sector. We have been laying the building blocks to ensure
we can be a part of this future, and believe that 2021 will be the
year when our hard work behind the scenes results in value accretive
transactions for the benefit of the Company and its shareholders.
Once again I would like to thank the Board and the Executive Team
for their dedication and commitment and thank our shareholders for
their patience and understanding.
Alastair Ferguson
Non-Executive Chairman
Date: 14 June
2021
Strategic Report
Tanzania
Scirocco continues to hold a number of licence interests in natural
gas and industrial gas assets in Tanzania.
These projects were selected for their significant subsurface potential
with existing reserves, significant prospective resources and proximity
to existing infrastructure location. The Company continues to believe
that the projects are well positioned to deliver investor returns
through both operational events and monetisation opportunities.
Despite challenges to operational progress in 2020, due in part to
the effect of COVID-19 on operations, the Board believes that all
projects made progress from a technical evaluation and planning perspective.
A. Ruvuma PSA
ARA Petroleum Tanzania 50% *
Limited ("APT")
Aminex plc ("AEX") 25%
Scirocco Energy plc 25%
* APT became operator in October 2020 following the completion
of its farm-in to the AEX working interest
In 2020 Scirocco held a 25% working interest in the Ruvuma Petroleum
Sharing Agreement ("Ruvuma PSA") in the south-east of Tanzania covering
an area of 3,447 square kilometres of which approximately 90% lies
onshore and the balance offshore. The Ruvuma PSA is in a region of
southern Tanzania where very substantial gas discoveries have been
made offshore in recent years and where gas has also been discovered
onshore and along the coastal islands at Ntorya, Mnazi Bay, Kiliwani
North and Songo-Songo.
License Extension
In April 2020, the Joint Venture formally received the extension
of the Mtwara Licence in respect to the Ntorya Location from the
Ministry of Energy of Tanzania. The extension, which was applied
for in late 2017, is valid for one year. Under the terms of the extension
the Joint Venture must carry out the following work programme:
* Acquire 200 square kilometres (surface coverage) of
3D seismic (min. expenditure of US$7 million)
* Drill the Chikumbi-1 exploration well (min.
expenditure of US$15 million)
* Complete the negotiation of the Gas Terms for the
Ruvuma PSA with the Tanzania Petroleum Development
Corporation
* Using the data gathered from Chikumbi-1 and the
seismic acquisition, prepare and submit an
application for a Development Licence for the Ntorya
Location.
2020 Operational Update
The proposed gross 2020 contingent work programme and budget for
Ruvuma included approximately US$40 million of drilling and seismic
work. However due to delays in receiving the approval for the completion
of the APT and Aminex farm-in and the restriction in international
travel resulting from the COVID-19 pandemic the Joint Venture was
unable to make significant operational progress on the asset during
the period. Had the work programme been executed as budgeted Scirocco
would have been expected to fund approximately US$10 million.
During 2020 (and before the transfer of operatorship to APT in October
2020), the operator, Ndovu Resources Limited (a wholly owned subsidiary
of Aminex plc), completed an updated well design for the Chikumbi-1
exploration well and redesigned a significantly larger 3D seismic
programme than was originally planned. The changes to the seismic
programme reflect the intent of the Joint Venture to gather all of
the information required in order to rapidly progress an early production
scheme and then a full-field development delivering early cashflow
from the Ntorya gas field.
Technical Overview
During 2018 the Joint Venture conducted technical work with the support
of RPS Energy Consultants Limited, on the resource estimates, and
by IO Consulting, on the development engineering and economics, leading
to the upgraded resource estimates included in Table 1. The independent
studies now estimate gross 2C contingent resources of 763 bcf, of
which 191 bcf are net to Scirocco's working interest, equivalent
to approximately 31.8 mmbbls oil equivalent.
Resource summary - Ntorya Field
Gross Licence Basis (bcf)
Gross Mean unrestricted
Licence 1C 2C 3C GIIP
Mtwara Development pending 26 81 213
Mtwara Development unclarified 324 682 950 1,870
763
Resource summary excluding Ntorya Field
Prospective Resources (bcf)*
Gross on Licence
Prospect/Lead 1U 2U 3U Mean unrisked Pg %
Chikumbi Jurassic 399 936 1,798 1,351** 8***
* Assuming development licence is ratified
** P50
*** RPS assessment of PG
B. Kiliwani North Development Licence ("KNDL")
Scirocco holds a 8.3918% working interest in the Kiliwani North Development
Licence. This interest was finalised following the exit of Bounty
Oil and Gas NL from the Joint Venture. TPDC has a back-in right to
take up an interest in the KNDL which would reduce Scirocco's interest
to 7.975%. To date TPDC has not taken up that right.
2020 Operational Update
As a result of reservoir pressure decline and compartmentalisation,
the Kiliwani North-1 well has not produced during the period.
The well has produced approximately 6.4 bcf of gas to date from a
compartment estimated to contain approximately 10 BCF. Estimated
gas resources have been independently audited by RPS Energy, who
show the Kiliwani North structure to contain approximately 31 bcf
(gross mean GIIP).
The Joint Venture has been exploring various options to reinstate
production from the well. The Operator has prepared, and is awaiting
approval for, a remedial work programme intended to establish fluid
levels in the well bore, measure reservoir pressure and to unload
fluid using foam treatment technology.
Aminex (the operator) undertook preliminary remedial work to repair
the downhole safety valve in late 2018. This resulted in the flow
of a small volume of gas to the gas facility before the well quickly
ceased flow, likely due to fluid build-up in the wellbore. Aminex
has prepared a perforation strategy for a lower zone within the reservoir
and an alternative remedial work programme intended to establish
fluid levels in the wellbore, reservoir pressure and to unload potential
fluid using foam treatment. The operator is working with the TPDC
on agreed methods to handle wellbore fluids which will potentially
be unloaded during operations on the well. Agreement and planning
will be required prior to starting operations.
If successful, this operation is expected to re-establish gas production
from the well. The Joint Venture has been waiting on final approvals
for a significant period of time and whilst the Joint Venture is
confident that the unloading and perforation operations can be carried
out, there is no firm timeline on when the approvals will be granted
which would allow the operation to commence. The Joint Venture estimates
that once approvals are in place the work could be carried out within
a 3 - 6 month time period subject to travel restrictions associated
with the ongoing COVID-19 pandemic being lifted.
A resource report by LR Senergy, completed in May 2015, attributed
approximately 28 bcf gross best estimate contingent resource to the
Kiliwani North field. These estimates were revisited by RPS in 2018
following production over an 18-month period totalling approximately
6.4 bcf. This resulted in a new Pmean GIIP of 30.8 bcf and a remaining
gross 2P reserve of 1.94 bcf. It is felt that with further intervention
additional gas can be recovered from the KN-1 well.
The Operator continues to meet regularly with the relevant Tanzanian
authorities, on behalf of the Joint Venture, to discuss and resolve
the issue of outstanding receivables from previous gas sales from
KNDL.
The well has not produced since the first quarter of 2018, during
which the Kiliwani North-1 ("KN-1") well produced intermittently.
The intermittent production was mainly as a result of increased water
production, natural reservoir depletion and a relatively high inlet
pressure at the Songo Songo Island Gas Processing Plant ("SSIGPP").
The Joint Venture has identified the possibility of perforating a
lower and potentially gas saturated section of the reservoir. Operator
conducted analysis indicates the possibility of providing up to 8
bcf of additional resource from KN-1. The Joint Venture will continue
to consider plans for 3D seismic acquisition over Kiliwani North
to support the identification of further drilling or side-track opportunities
which may be required to drain the remainder of the structure.
C. Helium One
Scirocco was an early investor in and largest (pre-IPO) shareholder
of Helium One Limited ("Helium One") following an original equity
subscription in 2017 and participation within a convertible loan
note issuance in early 2019. Immediately prior to the company's IPO
in December 2020 Scirocco held a c. 12% interest.
Operational Update
Throughout the period Helium One has been actively focused on a number
of key activities to progress the project, including -
i) IPO
A key objective for Helium One was to complete an IPO on a recognised
stock exchange to provide access to capital for ongoing investment.
This objective was achieved in early December 2020 when it completed
its admission to the AIM market of the London Stock Exchange following
the amalgamation with Attis Oil and Gas. The IPO highlights included;
* Successfully raised GBP6 million by way of an
oversubscribed placing of 211,267,597 ordinary shares
with institutional and other investors at a price of
2.84 pence per Ordinary Share--
* Large-scale, high-grade primary helium project with
un-risked prospective helium resource (2U/P50) of c.
138 bcf;
* Management team with an extensive track record of
exploration, development and operations in Africa
* Fully funded for exploration programme commencing in
Q1/Q2 2021 consisting of infill seismic acquisition
and three well drilling programme targeting high
priority Prospects over the Rukwa Project
Immediately following the IPO, Scirocco held a 4.29% interest in
Helium One.
ii) Drilling and Seismic programme
Following the IPO and the securing of funding to execute the drilling
programme the company has made significant operational progress towards
its initial exploration drilling programme including the commencement
of a 150km infill seismic campaign targeting shallow trap structures
identified from the interpretation of historic seismic and recent
gravity gradient data. The infill seismic data will provide improved
resolution on identified trap structures and assist with optimising
the exploration drilling programme.
iii) Seismic campaign
In February 2021, Helium One announced that it had commenced the
150km infill seismic campaign with the objective of providing improved
resolution over identified drill targets.
Close spaced seismic data acquisition will be focussed in areas of
known prospectivity to assist in providing greater clarity on the
subsurface structures which Helium One believe have the highest chances
of successfully discovering Helium. The seismic campaign is fully
permitted and benefits from strong community and governmental support.
iv) Drilling campaign
The company has made significant progress in the operational readiness
for the drilling campaign scheduled to commence in Q2 2021, including:
* Completion of Environmental and Social Impact
Assessment (ESIA) and Compensation Survey, including
consultation with communities in nine villages
closest to the drill locations.
* Submission of key Environmental Impact Assessment for
the Company's proposed drilling programme at the
Rukwa Project to the National Environment Management
Council (NEMC) of the Tanzanian Government.
* The study, which covers a project area of 310km2 in
three prospecting licences (PL10712/2015,
PL10713/2015 and PL10727/2015), is a key document in
securing environmental permits for exploration
drilling.
* Appointment of Mitchell Drilling Limited, a global
leader in drilling technologies with over 50 years'
experience and 115 rigs globally, as drilling
contractor for the Company's three well exploration
programme.
Investment Summary
Helium One owns exploration licences in a number of highly prospective
helium properties in Tanzania. Scirocco's investment in Helium One
has proved to be a success and a good strategy for the Company as
the share price has increased from 7.25 pence per share at 31 December
2020 to 21.40 pence per share at the date of authorisation of the
financial statements.
Originally identified by means of helium macro-seeps the prospects
under investigation by Helium One have been mapped using soil geochemistry
anomalies, airborne geophysical tools and on legacy 2D seismic data
acquired previously during the 1980s. The identified macro-seepage
indicates high concentrations of helium (up to 10% by volume) in
association with nitrogen that may be trapped in the subsurface.
Resources associated with the project have been independently assessed
by SRK Consulting (2019) and the most mature of the projects, in
the Rukwa Basin of the East African Rift Valley, have been verified
as potentially holding gross unrisked best estimate prospective recoverable
volume of 138 bcf of helium in place.
Global helium demand is approximately 6 bcf per annum. Supply is
delivered by extracting helium from hydrocarbon production projects
in a number of countries including the USA, Qatar, Algeria and Russia.
Future supplies are also associated with hydrocarbon development
projects where the development is driven by the demand for natural
gas.
Demand for helium has been growing at a rate of between 1.5 to 3
per cent per annum over the last decade and is a vital component
of many modern technologies. As a result of its unique properties
as a super fluid, it plays a vital role in devices which use super
conducting magnets; as in MRI machines. As an inert gas helium also
plays a vital role in the production of many critical electronic
components such as disk drives and fibre optics, and is additionally
used for industrial testing, purging and leak detection. Helium,
as a lifting gas in hybrid air vehicles (and other forms of airship),
has also begun to have increased significance.
However, the US government has been selling its strategic reserve
and will close the facility for international sales no later than
September 2021, after which there is projected to be a significant
shortage of helium available on world markets.
Helium One holds one of the only known high-volume, standalone helium
resource projects which is not reliant on associated hydrocarbon
development. If successful it could provide much needed stability
to global helium supply and if commercial volumes are discovered,
could be developed as a major swing producer to global markets.
The Helium One Tanzania projects have excellent supply economics
and, once liquefied close to production well sites, the helium could
be transported to world markets via the deep-water port at Dar es
Salaam. Given the competitive demand for crude helium on world markets
Helium One could sell helium at the wellhead through an off-take
agreement with a large industrial gas company who would liquefy and
transport the helium to market. During the 2018 auction of crude
helium by the Bureau of Land Management ("BLM") in the USA the average
price set for crude helium was US$280 per thousand cubic feet with
spot prices reported at levels significantly higher than that level.
Investment Case
Scirocco believes that its participation in Helium One continues
to provide exposure to attractive upside valuation in the event of
a successful test of in place resources through appraisal drilling.
Key positives supporting this:
* In situ Helium seeps at surface with Helium
concentrations measured in the range of 8-10.2% which,
if proven through appraisal drilling, would represent
a world class source of Helium;
* A number of mapped structures potentially capable of
holding c. 138 bcf Helium in aggregate as indicated
by an independent report prepared by SRK Consulting;
* An experienced management team, recently augmented,
with a proven track record of developing value in the
natural resources sector;
* Robust supply/demand dynamics in the global helium
market which support highly attractive valuation of
any resource, if proven; and
* Engaged community of offtake parties in the specialty
industrial gas market willing to fund the
installation and operation of the necessary
liquefaction and purification facilities.
Other investments - non-core
A. Ausable Reef gas assets located in Ontario, Canada (28.56%
interest)
On 22 March 2019, Scirocco announced that as part of the portfolio
rationalisation, the Company had signed Heads of Terms ("HoT") with
Levant Exploration and Production Corp. ("Levant") for the divestment
of Scirocco's 28.56% in the Ausable Reef gas assets (the "Assets")
to Levant.
In July 2020, the Company announced that it had entered into a conditional
asset purchase agreement ("Agreement") with Reef Resources Limited
("Reef") and Levant for the sale of its 28.56% interest in the Assets
to Levant.
Unfortunately, Levant was unable to satisfy certain of the conditions
to completion contained in the Agreement and consequently Reef and
Scirocco elected to terminate the Agreement in March 2021.
Following the termination of the Agreement, Scirocco entered into
a quit claim agreement with Reef pursuant to which Scirocco has transferred,
for nominal consideration, its 28.56% interest in the Assets to Reef
and Reef has assumed the associated liabilities, historic and future,
in each case with effect from 1 December 2020.
The Company fully impaired the value of its holding in the Assets
to zero in 2017 and incurred only nominal costs related to its holding
in the Assets in 2020.
Mr Tom Reynolds
Director
Date: 14 June 2021
Glossary and Notes
2D seismic seismic data collected using the two-dimensional common depth
point method
3D three-dimensional
AIM London Stock Exchange Alternative Investment Market
API American Petroleum Institute
barrel or 45 US gallons
bbl
bbls barrels of oil
bcf billion cubic feet
best estimate the most likely estimate of a parameter based on all available
or P50 data, also often termed the P50 (or the value of a probability
distribution of outcomes ta the 50% confidence level)
billion 10 to the power of 9
bopd barrels of oil per day
CNG condensed natural gas
contingent those quantities of petroleum estimated, at a given date,
resources to be potentially recoverable from known accumulations, but
the associated projects are not yet considered mature enough
for commercial development due to one or more contingencies
CPR Competent Persons Report
discovery a petroleum accumulation for which one or several exploratory
wells have been established through testing, sampling and/or
logging the existence of a significant quantity of potentially
moveable hydrocarbons
electric tools used within the wellbore to measure the rock and fluid
logs properties of the surrounding formations
GIIP gas initally in place
GSA gas sales agreement
HH-1 Horse Hill-1 well
HHDL Horse Hill Developments Limited
KN-1 Kiliwani North-1 well
KNDL Kiliwani North Development Licence
m thousand (ten to the power 3)
mm million (ten to the power 6)
mmbbls milion barrels of oil
mmscf million standard cubic feet of gas
mmscfd millon standard cubic feet of gas per day
OGA UK Oil and Gas Authority (formally the Department of Energy
and Climate Change
oil in place stock tank oil initally in place, those quantities of oil
or STOIIP that are estimated to be known reservoirs prior to production
commencing
pay reservoir in portion of a reservoir formation that contains
economically producible hydrocarbons. The overall interval
in which pay sections occur is the gross pay; the portion
of the gross pay that meets specific criteria such as minimum
porosity, perme
PEDL Petroleum Exploration and Development Licence
permeability the capability of a porous rock or sediment to permit the
flow of fluids through the pore space
petrophysics the study of the physical and chemical properties of rock
formations and their interactions with fluids
play a set of known or postulated oil or gas accumulations sharing
similarr geologic properties
porosity the percentage of void space in a rock formation
prospective those quantities of petroleum which are estimated, at a given
resources date, to be potentially recovered from undiscovered accumulations
proven reserves those quantities of petroleum, which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty
to be commercially recoverable (1P), from a given data forward,
from known reservoirs and under defined economic conditions,
probable those additional reserves which analysis of geoscience and
reserves engineering data indicate are less likely to be recovered
than Proven Reserves but more certain to be recovered than
Possible Reserves. It is equally likely that actual remaining
quantities recover
possible those additional reserves which analysis of geoscience and
reserves engineering data suggest are less likely to be recoverable
than Probable Reserves. The total quantities ultimately recovered
from the projkect have a low probability to exceed the sum
of Proved reserves
PSA petroleum sharing agreement
PRMS Petroleum Resources Management system
reserves those quantities of petroleum anticipated to be commercially
recovered by application of development projects to known
accumulations from a given date forward under defined conditions
reservoir a subsurface rock formation containing an individual natural
accumulation of moveable petroleum
SPE Society of Petroleum Engineers
tcf trillion cubic feet
trillion 10 to the power of 12
unconventional widely accepted to mean those hydrocarbon reservoirs that
reservoir are tight; that is have low permeability
DIRECTORS' REPORT
FOR THE YEARED 31 DECEMBER 2020
The Directors are pleased to present this year's annual report together
with the financial statements for the year ended 31 December 2021.
The name of the Company was changed from Solo Oil Plc to Scirocco
Energy Plc on 25 September 2020.
A statement on Corporate Governance is set out on pages 18 to 31.
Principal Activities
The principal activity, subject to Shareholder approval being granted
for the proposed investing policy change, is to acquire a diverse
portfolio of direct and indirect interests in attractive cash generative
and development assets within the European sustainable energy market.
The Board is seeking to invest in assets which meet the following
criteria:
* cash generative, with the potential to re-invest
operational cash flow in further growth;
* situated within the broad energy space, a market
which the Board knows well;
* primary targets within one of three asset
classifications:
- Energy. Assets which are involved in the direct production of
low carbon energy
- Circular. Assets which recover valuable components from waste
streams
- Vector. Assets involved with the transmission, storage and delivery
of low carbon energy
* assets which can attract the necessary investment
capital, taking appropriate account of growing
investor sentiment towards ESG and SRI indicators;
and
* assets which deliver stable returns, with lower
exposure to global commodity prices.
The Company may invest by way of outright acquisition, including
the intellectual property, of a relevant business, partnerships
or joint venture arrangements, or by the acquisition of assets.
Such investments, for the most part, will be focused on the Company
acquiring part of a company or project (which in the case of an
investment in a company may be private or listed on a stock exchange,
and which may be pre-revenue), and such investments may constitute
a minority stake in the company or project in question. The Company's
investments may take the form of equity, joint venture debt, convertible
instruments, licence rights, or other financial instruments as the
Directors deem appropriate.
Scirocco intends to be a long-term investor and the Directors will
place no minimum or maximum limit on the length of time that any
investment may be held.
There is no limit on the number of projects into which the Company
may invest, nor the proportion of the Company's gross assets that
any investment may represent at any time.
Business Review and Future Developments
A detailed review of the Company's business is set out in the Chairman's
statement incorporating the strategic report (pages 1-12).
Details of expected future developments for the Company are set
out in the Chairman's statement incorporating the strategic report
(pages 1-12).
Results and Dividends
Loss on ordinary activities after taxation amounted to GBP4.118
million (2019: GBP2.561 million). The Directors do not recommend
payment of a dividend (2019: nil).
Key Performance Indicators
Given the nature of the business and that the Company had adopted
a new investing policy and is in the early stages of developing
new operations, the directors are of the opinion that analysis using
KPIs is not appropriate for an understanding of the development,
performance or position of our businesses at this time. The Board
will review this position during 2022 and will look to introduce
a KPI indicators when the Company is in the position to do so.
Directors
The directors who held office during the year and up to the date
of signature of the financial statements were as follows:
Date of appointment
Executive Directors
Jonathan Fitzpatrick
Alastair Ferguson
Thomas Reynolds
Non-Executive Directors
Donald Nicolson
Muir Miller 18 February 2021
Directors' Remuneration
The Company remunerates the Directors at a level commensurate with
the size of the Company and the experience of its Directors. The
Remuneration Committee has reviewed the Directors' remuneration
and believes it upholds the objectives of the Company with regard
to these issues. Details of the Director emoluments and payments
made for professional services rendered are set out in Note 7 to
the financial statements.
Directors' Interests
The Directors' interests in the share capital of the Company at
31 December 2020 were:
At 31 December 2020 At 31 December 2019
Director Shares Options Shares Options
Jonathan Fitzpatrick 26,203,189 * 18,461,483 28,708,641 * 2,500,000
Alastair Ferguson 24,325,395 16,323,575 16,825,397 -
Tom Reynolds 2,464,108 ** 18,843,342 2,464,108 ** -
Donald Nicolson - 10,419,772 - -
Muir Miller *** - - - -
* includes indirect interest of 916,624 shares held by Carolyn Fitzpatrick
** includes indirect interest of 286,738 shares held by Paula Reynolds
*** Mr Muir Miller joined the Board on 18 February 2021
No Director had, during the year or at the end of the year, other
than disclosed above, a material interest in any contract in relation
to the Group's activities except in respect of service agreements.
Gneiss Energy, which is wholly owned by Mr Fitzpatrick and his wife,
maintains a service contract for the provision of operational and
technical management services, guidance and support on public relations
and market engagement strategy, flexible work space and meeting
rooms, telephones, company secretary support and corporate finance
advisory services with the Company, the details of which are disclosed
in Note 24 to the financial statements.
Subject to the conditions set out in the Companies Act 2006, the
Company has arranged appropriate Directors' and Officers' insurance
to indemnify the Directors against liability in respect of proceedings
brought by third parties. Such provisions remain in force at the
date of this report.
Substantial Shareholdings
At 8 June 2021 the following had notified the Company of disclosable
interests in 3% or more of the nominal value of the Company's shares:
Shareholder Number of shares % of Issued Capital
Interactive Investor Services Nominees
Limited 83,339,933 10.98%
Forest Nominees Limited 68,534,128 9.03%
Interactive Investor Services Nominees
Limited 48,053,575 6.33%
Hargreaves Lansdown (Nominees) Limited 45,758,207 6.03%
Barclays Direct Investing Nominees
Limited 42,905,615 5.65%
HSDL Nominees Limited 37,327,678 4.92%
Hargreaves Lansdown (Nominees) Limited 34,626,161 4.56%
Hargreaves Lansdown (Nominees) Limited 33,728,233 4.45%
Securities Services Nominees Limited 24,598,242 3.24%
The Bank of New York (Nominees) Limited 24,525,123 3.23%
Pershing Nominees Limited 24,325,395 3.21%
HSBC Client Holdings Nominee (UK) Limited 24,111,619 3.18%
Environmental Responsibility
The Company is aware of the potential impact that its investee companies
may have on the environment. The Company ensures that it, and its
investee companies at a minimum comply with the local regulatory
requirements and the revised Equator Principles with regard to the
environment.
Supplier Payment Policy
The Company's policy is to agree terms and conditions with suppliers
in advance; payment is then made in accordance with the agreement
provided the supplier has met the terms and conditions. Suppliers
are typically paid within 30 days of issue of invoice.
Employment Policies
The Company will be committed to promoting policies which ensure
that high calibre employees are attracted, retained and motivated,
to ensure the ongoing success for the business. Employees and those
who seek to work within the Company are treated equally regardless
of sex, marital status, creed, colour, race or ethnic origin.
Political Contributions and Charitable Donations
During the period the Company did not make any political contributions
or charitable donations.
Financial Instruments
See Note 23 to the financial statements.
Related Party Transactions
See Note 24 to the financial statements.
Post Reporting Date Events
At the date these financial statements were approved, being 14 June
2021, the Directors were not aware of any significant post balance
sheet events other than those set out in the notes to the financial
statements.
Annual General Meeting ("AGM")
This report and nancial statements will be presented to shareholders
for their approval at the AGM. The Notice of the AGM will be distributed
to shareholders together with the Annual Report.
Health and Safety
The Company's aim will always be to achieve and maintain the highest
standard of workplace safety. In order to achieve this objective
the Company sets demanding standards for workplace safety and will
provide comprehensive training and support to employees.
Auditor
PKF Littlejohn LLP were reappointed as auditors of the Company and
in accordance with Section 285 of the Companies Act 2006, a resolution
preposing they be reappointed will be proposed at the next Annual
General Meeting.
Going Concern
The Directors note the losses that the Company has made for the
year ended 31 December 2020. The Directors have prepared cash flow
forecasts for the period ending 31 December 2022 which take account
of the current cost and operational structure of the Company. The
cost structure of the Company comprises a proportion of discretionary
spend and therefore in the event that cash flows become constrained,
costs can be reduced to enable the Company to operate within its
available funding. These forecasts demonstrate that the Company
has sufficient cash funds available, on the assumption that further
funds can be sourced as and when needed, to allow it to continue
in business for a period of at least twelve months from the date
of approval of these financial statements.
Accordingly, the financial statements have been prepared on a going
concern basis. Comments on going concern are included in the Operations
report and note 1. Although the Ruvuma asset is held for sale, no
guarantee can be made that a sale occurs. The critical assumption
in the going concern determination is that the Ruvuma PSA and the
costs associated with the development of the Ntoyra natural gas
discovery are met by the Company for its 25% interest. It is assumed
that - if required - the Company would be able to access additional
funding. If additional funding was not available there is a risk
that commitments could not be fulfilled, and assets would be relinquished.
Statement of Disclosure to the Auditor
In the case of each person who was a Director at the time this report
was approved:
* So far as that Director was aware there was no
relevant available information of which the Company's
auditor was unaware; and
* That Director had taken all necessary steps to make
themselves aware of any relevant audit information,
and to establish that the Company's auditors were
aware of that information.
Electronic Communication
The maintenance and integrity of the Company's website is the responsibility
of the Directors: the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred
to the financial statements since they were initially presented
on the website.
The Company's website is maintained in accordance with AIM Rule
26.
Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation
in other jurisdictions.
On behalf of the board
Mr Tom Reynolds
Director
14 June 2021
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEARED 31 DECEMBER 2020
The Directors are responsible for preparing the financial statements
in accordance with applicable law and regulations. Company law requires
the Directors to prepare financial statements for each financial
year. Under that law the Directors are required to prepare the Financial
Statements in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company as at the end of the financial
year and of the profit or loss of the Company for that period. In
preparing these financial statements, the Directors are required
to:
* select suitable accounting policies and then apply
them consistently;
* make judgments and accounting estimates that are
reasonable and prudent;
* state whether the applicable IFRSs as adopted by the
European Union have been followed subject to any
material departures disclosed and explained in the
financial statements; and
* prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions
and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's
website. Legislation in the United Kingdom governing the preparation
and dissemination of the financial statements may differ from legislation
in other jurisdictions.
The Company is compliant with AIM Rule 26 regarding the Company's
website.
CORPORATE GOVERNANCE STATEMENT
FOR THE YEARED 31 DECEMBER 2020
As Chairman of Scirocco Energy plc, it is my responsibility to ensure
that the Board is performing its role effectively and has the capacity
and ability, structure and support to enable it to continue to do
so.
How we govern the Company
Information on how the Company organises its Corporate Governance
is set out below and can also be found on the Company's website www.sciroccoenergy.com
and is, in the opinion of the Board, fully in accordance with the
revised requirements of AIM Rule 26.
From September 2018 onwards, all AIM quoted companies were required
to set out details of the recognised corporate governance code that
the Board of Directors has decided to adopt and provide reasons for
any departures where it does not comply with the code. The Company
has elected to adopt the 2018 Quoted Companies Alliance Corporate
Governance Code for Small and Mid-Sized Companies (the "QCA Code").
The Company intends to adhere to the recommendations of the QCA Code
to the extent it considers them appropriate in light of the Company's
size, liquidity and capital resources.
The QCA code is constructed around 10 broad principles and a set
of disclosures. The QCA has stated what it considers to be appropriate
arrangements for growing companies and asks companies to provide
an explanation of how they are meeting the principles through the
prescribed disclosures. We have considered how we apply each principle
to the extent that the Board judges these to be appropriate in the
circumstances, and below we provide an explanation of the approach
take in relation to each.
2020 and 2021 have seen, amongst others, the following governance
developments:
* The Chairman, CEO and COO met with major shareholders
and hosted a number conference calls with investors;
* AIM Rules Compliance and Disclosure Committee
established;
* Developed the transition energy strategy through 2020
and issued an augmented strategy in Q1 2021;
* Addition of Muir Miller to the Board in February
2021;
* Establishing an ESG Committee that Muir Miller will
Chair in 1H21.
Board of Directors
The Board is responsible for the overall governance of the Company.
Its responsibilities include setting the strategic direction of the
Company, providing leadership to put the strategy into action and
to supervise the management of the business.
During 2020, Scirocco Energy operated with a four-member Board and
the Board was further strengthened in March 2021 when Mr Muir Miller
was appointed as an Independent Non-Executive Director. Mr Miller
brings with him a wealth of experience in the low carbon sector and
will be instrumental in building the company in line with the stated
transition energy strategy. As part of a managed transition and maintaining
an appropriate number of Directors Mr Jon Fitzpatrick has also stated
his intention to stand down from the Board before the next AGM.
The Board currently comprises four non-executive Directors ('NEDs')
and the CEO. Biographies of the Directors are on pages 23-24. Due
to their shareholding in the Company, two of the NEDs are not considered
by the Board to be independent. The roles and responsibilities of
the Chairman, CEO, Non-Executive Directors and Company Secretary
are set out on the website and summarised below.
The Board has established the corporate governance values of the
Company and has overall responsibility for setting the Company's
strategic aims, de ning the business plan and strategy and managing
the nancial and operational resources of the Company. Overall supervision,
acquisition, divestment and other strategic decisions are considered
and determined by the Board. The Executive team is supported by the
wider team and external service providers as required. The Directors
are of the opinion that the Board comprises a suitable balance and
that the recommendations of the QCA Code have been implemented to
an appropriate level. The Board, through the Chairman in particular,
maintains regular contact with its advisers and public relations
consultants in order to ensure that the Board develops an understanding
of the views of major shareholders about the Company.
Terms of Reference
The Terms of Reference of all Board Committees are available on the
website.
Record of meetings
The Board meets regularly throughout the year. For the period ending
31 December 2020 the Board met 17 times (2019: 14, 2018: 10, 2017:
4) in relation to normal operational matters and on an ad hoc basis
as required to transact additional business to support the Company's
activities.
The Board is responsible for formulating, reviewing and approving
the Company's strategy, nancial activities and operating performance.
Day-to-day management is devolved to the Executive Director and management
who are charged with consulting the Board on all signi cant nancial
and operational matters. All Directors have access to the advice
of the Company's solicitors and the Company Secretary necessary information
is supplied to the Directors on a timely basis to enable them to
discharge their duties e ectively and all Directors have access to
independent professional advice, at the Company's expense, as and
when required.
Internal controls
The Directors acknowledge their responsibility for the Company's
systems of internal controls and for reviewing their effectiveness.
These internal controls are designed to safeguard the assets of the
Company and to ensure the reliability of nancial information for
both internal use and external publication. Whilst they are aware
that no system can provide absolute assurance against material misstatement
or loss, in light of increased activity and further development of
the Company, continuing reviews of internal controls will be undertaken
to ensure that they are adequate and e ective.
Compliance
The Company has also reviewed the appropriate policies and procedures
to ensure compliance with the UK Bribery Act. The Company continues
actively to promote good practice throughout the Company and has
initiated a rolling programme of anti-bribery and corruption training
for all relevant employees and consultants.
QCA Principles
Review of each of the QCA Principles:
Principle 1:
Establish a strategy Scirocco Energy plc is an investment company
and business model which whose strategy is to acquire a diverse portfolio
promote long-term value of direct and indirect interests in attractive
for shareholders cash generative and development assets within
the European sustainable energy market. In
2020, the Board announced its plan to review
and augment its strategy to invest in a broader
European energy market strategy targeting
attractive growth opportunities predominantly
within the European gas and energy transition
market whilst maximising value for shareholders
from the Company's existing portfolio. This
has been further developed as announced on
18 February 2021 and the Board is seeking
opportunities which meet the following criteria:
* cash generative, with the potential to re-invest
operational cash flow in further growth;
* situated within the broad energy space, a market
which the Board knows well;
* primary targets within one of three asset
classifications:
- Energy - assets which are involved in
the direct production of low carbon energy.
- Circular - Assets which recover valuable
components from waste streams.
- Vector - Assets involved with the transmission,
storage and delivery of low carbon energy.
* assets which can attract the necessary investment
capital, taking appropriate account of growing
investor sentiment towards ESG and SRI indicators;
and
* assets which deliver stable returns, with lower
exposure to global commodity prices.
Principle 2:
Seek to understand and The Board is committed to maintaining good
meet shareholder needs communication and having constructive dialogue
and expectations with all its shareholders. The Company has
close ongoing relationships with its private
shareholders. Institutional shareholders
and analysts have the opportunity to discuss
issues and provide feedback at meetings with
the Company. In addition, all shareholders
are encouraged to attend, where possible,
the Company's Annual General Meeting. Investors
also have access to current information on
the Company though its website, www.sciroccoenergy.com,
and via Tom Reynolds (CEO) and Doug Rycroft
(COO), who are available to answer investor
relations enquiries. The Company in conjunction
with its investor relations advisor has developed
a Communications Strategy to formalise how
shareholder communications are managed.
Principle 3:
Take into account wider The Board recognises that the long-term success
stakeholder and social of the Company is reliant upon its ability
responsibilities and and willingness to engage with the broader
their implications for range of stakeholders to positively influence
long-term success the development of the Company and the communities
we interact with operationally and corporately.
The Board has put in place a range of processes
and systems to ensure that there is close
oversight and contact with its key resources
and relationships.
Given that Scirocco Energy plc is a small
company there is close interaction between
the Board and Executive Management to help
ensure successful two-way communication with
agreement on goals, targets and aspirations
for the Company. Scirocco Energy plc through
its advisers and JV partners has developed
close ongoing relationships with a broad
range of its stakeholders and provides them
with the opportunity to raise issues and
provide feedback to the Company.
Principle 4:
Embed effective risk It is critical that Scirocco Energy plc has
management, considering a robust view of its risk profile and appetite
both opportunities and so as to ensure both its existing and new
threats, throughout investments are managed within acceptable
the organization. margins of risk. The processes are in place
to understand the Company's key drivers for
success and to be able to assess the associated
risks in delivering on its strategy successfully.
Given the specialised nature of investing
in, and being involved in, the operations
of specialised assets in the energy sector,
it is imperative that the Board considers
at all times that it has the appropriate
risk management system including both people
and processes to successfully mitigate these
risks.
The Board encourages a dyamic and constructuve
dialogue between Executive Management, its
advisers and the Board including the willingness
to challenge assumptions and the consideration
of emerging and interrelated risks for its
investment portfolio.
In addition to its other roles and responsibilities,
the Audit Committee is responsible to the
Board for ensuring that procedures are in
place and are being implemented effectively
to identify, evaluate and manage the significant
risks faced by the Company. The risk assessment
matrix below sets out those risks, and identifies
the controls that are currently in place.
This matrix is updated as changes arise in
the nature of risks or the controls that
are implemented to mitigate them. The Audit
Committee reviews the risk matrix and the
effectiveness of scenario testing on a regular
basis. The Board has a comprehensive review
of the risks every six months and works with
Executive Management to understand and agree
on the types and format of risk information
that the Board requires. In addition, the
Board periodically assesses the risk oversight
processes and ensure suitability with/and
alongside its current policies.
See risk management section which begins
on page 27.
Principle 5:
Maintain the Board as The Board is currently comprised of five
a well-functioning, Directors; Alastair Ferguson, Non-Executive
balanced team led by Chairman; Jon Fitzpatrick, Non-Executive
a chair Director; Donald Nicolson, Independent Non-Executive
Director, Muir Miller Independent Non-Executive
Director and Tom Reynolds, CEO. Biographical
details of the current Directors are set
out within Principle Six below.
Executive and Non-Executive Directors are
subject to re-election at intervals of no
more than three years. The letters of appointment
of all Directors are available for inspection
at the Company's registered office during
normal business hours. The Executive Director
is considered to be a full-time employee
whilst the Non-Executive Directors are considered
to be part time but are expected to provide
as much time to the Company as is required.
The Board elects a Chairman to chair every
meeting.
The Board notes that the QCA recommends that
the Chairman's responsibilities should be
devolved from the day-to-day running of the
business in order to ensure independence.
Following the resignation of the former Managing
Director in February 2019, Alastair Ferguson
temporarily assumed the role of Executive
Chairman in order to maintain a balance between
executive and non-executive roles on the
Board and to ensure the Company has sufficient
executive oversight. The appointment of Tom
Reynolds as CEO in October 2019 enabled Alastair
Ferguson to step back into the role of Non-Executive
Chairman.
The Board meets at least four times per calendar
year. It has established an Audit Committee,
a Remuneration Committee and an AIM Rules
Compliance and Disclosures Committee, which
are set out in more detail below. At this
stage, the Board does not consider it necessary
to establish a separate Nominations Committee.
It shall continue to monitor the need to
match resources to its operational performance
and costs and the matter will be kept under
review going forward.
Attendance at Board and Committee Meetings
The Company reports annually on the number
of Board and Committee meetings held during
the year and the attendance record of individual
Directors.
To date in the current financial year the
Directors have a good record of attendance
at such meetings. In order to be efficient,
the Directors meet formally and informally
both in person and by telephone. To date
there have been at least quarterly meetings
of the Board, and the volume and frequency
of such meetings is expected to continue
at this rate.
Principle 6:
Ensure that between The Board currently consists of five Directors.
them the Directors have The Company believes that the current balance
the necessary up-to-date of skills and experience in the Board as
experience, skills and a whole, reflects a very broad range of commercial
capabilities and professional skills across geographies
and industries and all of the Directors have
experience in public markets.
The Board recognises that it currently has
a limited diversity and this will form a
part of any future recruitment consideration
if the Board concludes that replacement or
additional directors are required.
The Board shall review annually the appropriateness
and opportunity for continuing professional
development whether formal or informal.
Alastair Ferguson (Non-Executive Chairman)
Mr Ferguson is a Chartered Engineer and has
over 40 years' experience in the oil and
gas industry, the last seven of which have
been spent in various Chairman and non-executive
director positions. Mr Ferguson has considerable
commercial management experience and has
specific expertise in business development
and managing projects in complex political
environments.
Jon Fitzpatrick (Non-Executive Director)
Mr Fitzpatrick is a qualified corporate lawyer,
petroleum economist, investment banker and
energy sector adviser. He began his career
in 1994 as a research associate at the Centre
for Energy, Petroleum, Mineral Law and Policy
at the University of Dundee. In 2016, Jon
founded his own advisory practice, Gneiss
Energy Limited, operating exclusively within
the energy and resources sectors.
Scirocco Energy plc and Gneiss Energy Limited
have an ongoing advisory relationship.
Donald Nicolson (Independent Non-Executive
Director)
Mr Nicolson is a senior business leader with
more than 35 years experience in oil, gas,
mining and natural stone sectors. During
this time, he has held multiple board roles,
executive & non-executive, in both publicly-listed
and private companies. Between 2016 and 2019,
Mr Nicolson held the role of Chairman and
interim CEO for mining and quarrying firm
Levantina Natural Stone Co., having previously
held Vice Chairman, non-Executive Director
and Advisor roles. Mr Nicolson spent more
than 26 years with BP Exploration, during
which he held roles including Director of
BP North Sea, Chief of Staff to BP CEO (E&P),
Vice President for BP Alaska and Vice President
for BP Canada. Mr Nicolson is skilled in
strategy development, asset management, business
planning, investment decision making, and
business restructuring and has significant
fund-raising experience, including main market
IPO and debt refinancing.
Muir Miller (Independent Non-Executive Director)
Mr Miller is a Chartered Engineer and Member
of the Institution of Mechanical Engineers
with over two decades of senior executive
experience, with particular focus on the
renewable energy sector. Most recently, Mr
Miller was Managing Director of Peel Energy,
part of the privately owned, diverse and
entrepreneurial Peel Group, a leading infrastructure,
transport and real estate investor in the
UK, with collective investments owned and
under management of more than GBP5 billion.
Prior to joining Peel Energy, he was Business
Development Manager at Energy Power Resources,
with an installed capacity of 113MW of dedicated
biomass assets, 70MW of landfill gas assets,
and 100 MW of wind assets in France, UK and
Sweden. Between 2005 and 2007, Mr Miller
was CEO of Novera Macquarie Renewable Energy,
a joint venture with annual turnover of GBP32
million and one of the largest independent
renewable energy operators in the UK with
a total installed generating capacity of
117.5MW across 53 geographically diverse
sites.
Tom Reynolds (CEO)
Mr Reynolds is a Chartered Engineer with
over 25 years' experience in the energy sector,
including a range of technical and commercial
roles with BP plc, Total SA and British Nuclear
Fuels plc. He has also held management positions
at private equity investment and advisory
firms, including 3i plc, and specialises
in strategic planning, investment management
and cross-border M&A transaction execution
in the oil, gas, energy and infrastructure
sectors.
Principle 7:
Evaluate Board performance Internal evaluation of the Board, the Committees
base on clear and relevant and individual Directors is to be undertaken
objectives, seeking on an annual basis in the form of peer appraisal
continuous improvement. and discussions to determine their effectiveness
and performance as well as testing the Directors'
continued independence. This will be undertaken
in conjunction with external advisers as
appropriate.
The results and recommendations that come
out of the appraisals for the directors shall
identify the key corporate and financial
targets that are relevant to each Director
and their personal targets in terms of career
development and training. Progress against
previous targets shall also be assessed where
relevant.
Principle 8:
Promote a corporate The Board is aware that the tone and culture
culture that is based set by the Board will greatly impact all
on ethical values and aspects of the Company as a whole and the
behaviours way that partners, contractors and advisors
behave. The corporate governance arrangements
that the Board has adopted are designed to
ensure that the Company delivers long term
value to its shareholders and that shareholders
have the opportunity to express their views
and expectations for the Company in a manner
that encourages open dialogue with the Board.
A large part of the Company's activities
is centred upon what needs to be an open
and respectful dialogue with partners, clients
and other stakeholders. Therefore, the importance
of sound ethical values and behaviours is
crucial to the ability of the Company to
successfully achieve its corporate objectives.
The Board places great import on this aspect
of corporate life and seeks to ensure that
this flows through all that the Company does.
The directors consider that at present the
Company has an open culture facilitating
comprehensive dialogue and feedback and enabling
positive and constructive challenge. The
Company has adopted a code for Directors'
and employees' dealings in securities which
is appropriate for a company whose securities
are traded on AIM and is in accordance with
the requirements of the Market Abuse Regulation
which came into effect in 2016.
Principle 9:
Maintain governance Ultimate authority for all aspects of the
structures and process Company's activities rests with the Board,
that are fit for purpose the respective responsibilities of the Chairman
and support good decision and Executive Director arising as a consequence
making by the Board of delegation by the Board. The Board has
adopted appropriate delegations of authority
which set out matters which are reserved
to the Board. The Chairman is responsible
for the effectiveness of the Board, while
management of the Company's business and
primary contact with shareholders has been
delegated by the Board to the Executive Director.
Audit Committee
The Audit Committee is comprised of Donald
Nicolson (Chairman) and Alastair Ferguson.
This committee has primary responsibility
for monitoring the quality of internal controls
and ensuring that the financial performance
of the Company is properly measured and reported.
It receives reports from the Executive Management
and auditors relating to the interim and
annual accounts and the accounting and internal
control systems in use throughout the Company.
The Audit Committee shall meet not less than
twice in each financial year and it has unrestricted
access to the Company's auditors.
Remuneration Committee
The Remuneration Committee is comprised of
Alastair Ferguson (Chairman), Jon Fitzpatrick
and Donald Nicolson. The Remuneration Committee
reviews the performance of the executive
directors and employees and makes recommendations
to the Board on matters relating to their
remuneration and terms of employment. The
Remuneration Committee also considers and
approves the granting of share options pursuant
to the share option plan and the award of
shares in lieu of bonuses.
AIM Rules Compliance and Disclosures Committee
The AIM Rules Compliance and Disclosure Committee
is responsible for ensuring the Company has
at all times sufficient procedures, resources
and controls in place to enable compliance
with the AIM Rules for Companies and make
accurate disclosures to meet its disclosure
obligations under MAR. The committee is comprised
of Jon Fitzpatrick (Chairman), Don Nicolson,
and Tom Reynolds.
Non-Executive Directors
The Board has adopted guidelines for the
appointment of Non-Executive Directors which
have been in place and which have been observed
throughout the year. These provide for the
orderly and constructive succession and rotation
of the Chairman and non-executive directors
insofar as both the Chairman and non-executive
directors will be appointed for an initial
term of five years and may, at the Board's
discretion believing it to be in the best
interests of the Company, be appointed for
subsequent terms.
In accordance with the Companies Act 2006,
the Board complies with: a duty to act within
their powers; to promote the success of the
Company; to exercise independent judgement;
to exercise reasonable care, skill and diligence;
to avoid conflicts of interest; not to accept
benefits from third parties and to declare
any interest in a proposed transaction or
arrangement.
External Representation
The Company has in the past invested in projects
and jurisdictions where it believes it has
a competitive advantage in providing early
stage capital alongside specialist knowledge
to realise potential value. In order to ensure
the Company has full visabilty and appropriate
controls over the projects it has invested
in the Company has representative participation
in the various operating committees and /
or Boards. The detail of which is outlined
in the table below;
Asset
Ruvuma PSC - Operating Committee
Kiliwani North Development Licence - Operating
Committee
Principle 10:
Communicate how the The Board is committed to maintaining good
company is governed communication and having constructive dialogue
and is performing by with all of its shareholders. The Company
maintaining a dialogue has close ongoing relationships with its
with shareholders and private shareholders. Institutional shareholders
other relevant stakeholders and analysts have the opportunity to discuss
issues and provide feedback at meetings with
the Company. In addition, all shareholders
are encouraged, where possible, to attend
the Company's Annual General Meeting. As
part of the Communications Strategy the Board
has engaged investor relations advisers to
guide the Company on best practice methods
of communicating through digital, print and
verbal mediums.
Investors also have access to current information
on the Company though its website and via
the Executive Management Team comprising
of Tom Reynolds (CEO) and Doug Rycroft (COO),
who are available to answer investor relations
enquiries. The Company proposes in 2020,
subject to the necessary formalities, to
move to electronic communications with shareholders.
The Company shall include, when relevant,
in its annual report, any matters of note
arising from the three Board committees.
Risk Management
Scirocco's activities are subject to a range of financial risks including
commodity prices, liquidity, exchange rates and loss of operational
equipment or wells.
These risks are managed with the oversight of the Board of Directors
and the Audit Committee through ongoing review, considering the operational
business and economic circumstance at that time. The primary risk
facing the business is that of liquidity.
Activity Risk Impact Control(s)
Financial Liquidity, market Inability to continue Robust capital and cost
and credit risk as a going concern management policies and
procedures
Reduction in asset values
Inappropriate controls Incorrect reporting Appropriate authority
and accounting policies of assets and investment levels
as agreed and delegated
by the Board
Adherence to Statement
of Accounting Policies
as detailed in financial
statements
Audit Committee
Recoverability of Reduction in net Trade debtors relate
trade debtors assets to a government entity
with which the Joint
Venture has a valid Gas
Sales Agreement, therefore
the Board remains of
the opinion that the
debt is fully recoverable
Regulatory Breach of rules Censure of withdrawl Strong compliance regime
adherence of listing authorisation instilled at the management,
advisory and Board levels
of the Company
Company established an
AIM Rules Compliance
and Disclosure Committee
in 2020
Strategic Damage to reputation Inability to secure Effective communication
new capital or investments with shareholders coupled
with consistent messaging
to potential investees
Robust compliance and
adherence to the Company's
ABC Policy
Inadequate disaster Loss of key operational Secure off-site storage
recovery procedures and financial data of data
Operational Significant operational Damage/loss of equipment Review of operator emergency
event in JVs and injury/death response plans and appropriate
contingency plans
Significant geopolitical Loss of operating Stakeholders engagement
event in one of ability and/or major plans to ensure visibility
our operating theatres project delays in political operating
environment
Management Recruitment and Reduction in operating Alignment of company's
retention of key capability recruitment and retention
staff and advisors objectives to ensure
a motivated workforce
and a safe working environment
Balancing salary with
longer term incentive
and retention plans aligning
participants directly
to the shareholder experience
Investment Discrete investments Reduction in value Robust risk management
suffer a change of investments process during the selection
in circumstance and investment process
or other risks manifesting including where appropriate
during the period third party technical,
of ownership financial, legal and
commercial due diligence
activity
Tom Reynolds
Director
Audit Committee Report
Scirocco's Audit Committee meets at least twice a year and is presently
chaired by Donald Nicolson and Alastair Ferguson is the other member
of the Committee.
Mr Nicolson joined the Board on 11th November 2019 and assumed the
role of Audit Committee Chairman.
During the course of 2020 and 2021 the Committee has reviewed:
* The statements to be included in the Annual report
concerning internal control, risk management and the
going concern statement;
* The carrying values of the producing and intangible
assets;
* The procedures for detecting fraud;
* The systems and controls for the prevention of
bribery; and
The committee has overseen the relationship with the external auditor,
including:
* Approved their remuneration for audit and non-audit
services;
* Approved their terms of engagement and the scope of
the audit;
* Satisfied itself that there are no relationships
between the auditor and the Company which could
adversely affect the auditor's independence and
objectivity;
* Monitored the auditor's processes for maintaining
independence, its compliance with relevant UK law,
regulation, other professional requirements and the
Ethical Standard, including the guidance on the
rotation of audit partner and staff;
* Assessed the qualifications, expertise and resources,
and independence of the external auditor and the
effectiveness of the external audit process;
* Evaluated the risks to the quality and effectiveness
of the financial reporting process in the light of
the external auditor's communications with the
committee;
* Met with the external auditor without management
being present, to discuss the auditor's remit and any
issues arising from the audit; and
* Discussed with the external auditor the factors that
could affect audit quality and reviewed and approved
the annual audit plan, ensuring it is consistent with
the scope of the audit engagement, having regard to
the seniority, expertise and experience of the audit
team.
The committee reviewed the findings of the audit with the external
auditor, including:
* A discussion of issues which arose during the audit,
including any errors identified during the audit; and
the auditor's explanation of how the risks to audit
quality were addressed;
* Key accounting and audit judgements;
* The auditor's view of their interactions with senior
management;
* A review of any representation letters requested by
the external auditor before they were signed by
management;
* A review of the management letter and management's
response to the auditor's findings and
recommendations; and
* A review of the effectiveness of the audit process,
including an assessment of the quality of the audit,
the handling of key judgements by the auditor, and
the auditor's response to questions from the
committee.
Donald Nicolson
Audit Committee Chair
Remuneration Committee Report
Scirocco's Remuneration Committee reviews the scale and structure
of the Executive Directors' remuneration and the terms of their service
contracts.
The remuneration and terms and conditions of appointment of the Non-Executive
Directors are set by the Board.
Mr Alastair Ferguson chairs the committee and Mr Jon Fitzpatrick
and Mr Donald Nicolson are the other members. The Remuneration Committee
meets at least twice a year.
In setting the remuneration for the Executive Directors and key staff,
the committee compares published remuneration data for other AIM
and Main LSE Board oil and gas companies of a similar market capitalisation
and seeks to ensure that the remuneration of the Executive Directors
is broadly comparable to their peers in other similarly sized organisations.
Moving forward the committee intends to broaden the group of companies
it reviews in this regard to include low carbon and renewable companies
of a similar standing.
In 2020, the Remuneration Committee supported the company in a number
of changes to the remuneration policy and compensation payments due
to directors, these included;
* c. 50% reduction in Directors' fees in February and
March 2020;
* 100% reduction in Directors' fees since April 2020
* Implementation of a share option scheme in lieu of
fees for the Board and Executive Management which
will support the Board's desire to preserve the
Company's cash position; and
* Granted incentive awards to each Director and key
management as part of their normal incentivisation
arrangements to align them with the future share
price performance of the Company.
Alastair Ferguson
Remuneration Committee Chair
AIM Rules Compliance and Disclosures Committee
Scirocco's AIM Rules Compliance and Disclosures Committee is responsible
for ensuring the Company has, at all times, sufficient procedures,
resources and controls in place to enable compliance with the AIM
Rules for Companies and make accurate disclosures to meet its disclosure
obligations under MAR.
The committee is comprised of Jon Fitzpatrick (Chairman), Donald
Nicolson, and Tom Reynolds.
The Committee was established in 2020 and has been active as part
of the process in producing the financial statements. The Committee
has established protocols to:
* Ensure that each meeting of the full Board includes
discussions of AIM matters, in particular to brief
the Board as to issues raised with the Nomad and
advice given, as they arise;
* Ensure that the executive Directors are communicating
as necessary with the Company's Nomad regarding
ongoing compliance with the AIM Rules and in relation
to proposed or potential transactions;
* Ensure that advice received from the Nomad is
recorded and taken into account;
* Ensure that all announcements made have been verified
and approved by the Nomad whose name must be on all
material announcements to RNS;
* Ensure that the Nomad is supplied with information on
the Company's financial condition on a regular and
timely basis and of any other key developments in the
Company from time to time;
* Ensure that the Nomad is maintaining regular contact
with the Company;
* Circulate to other members of the Board details of
any rule changes which are notified to the Chairman
of the Committee by the Nomad; and
* Ensure that the executive Directors take into account
advice given by the Nomad from time to time.
The Committee met twice in the course of 2020.
Jonathan Fitzpatrick
AIM Rules Compliance and Disclosures Committee Chair
INDEPENT AUDITOR'S REPORT
TO THE MEMBERS OF SCIROCCO ENERGY PLC
Opinion
We have audited the financial statements of Scirocco Energy Plc
(the 'company') for the year ended 31 December 2020 which comprise
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and international
accounting standards in conformity with the requirements of the
Companies Act 2006.
In our opinion, the financial statements:
* give a true and fair view of the state of the
company's affairs as at 31 December 2020 and of its
loss for the year then ended;
* have been properly prepared in accordance with
international accounting standards in conformity with
the requirements of the Companies Act 2006; and
* 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 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
We draw attention to note 1 in the financial statements, which indicates
that in order to meet spending requirements for existing projects
after 12 months from the date of the approval of these financial
statements, additional funding will be required. The amount of funding
cannot be reliably estimated at the point of approval of these financial
statements and the Company will be required to raise additional
funds either via an issue of equity or through the issuance of debt.
As stated in note 1, these events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the
company's ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
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 responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
Emphasis of matter
We draw your attention to note 3 of the financial statements, which
describes the company's assessment of the recoverability over the
receivables of GBP219k which remains outstanding as of the audit
report date. The company have explained their assessment over the
recoverability within critical accounting estimates and conclude
that there is no further impairment due. The financial statements
do not include the adjustments that would result if the company
was unable to fully recover the debt.
Our opinion is not modified in this respect.
Our application of materiality
In planning and performing our audit we applied the concept of materiality.
An item is considered material if it could reasonably be expected
to change the economic decisions of a user of the financial statements.
We used the concept of materiality to both focus our testing and
to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality
for the financial statements as a whole to be GBP190,000 (2019:
GBP208,000) based on approximately 1% of gross assets on the basis
that the company's investments are the main components of the Statement
of Financial Position.
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 70% of overall
materiality being GBP133,000 (2019: 60% of overall materiality being
GBP124,800). This has been adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be reduced
to a lower level, such as, for related party transactions and directors'
remuneration.
We agreed with the audit committee to report to it all identified
errors in excess of GBP9,500 (2019: GBP10,400). Errors below that
threshold would also be reported to it if, in our opinion as auditor,
disclosure was required on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular
we looked at areas involving significant accounting estimates and
judgements by the directors in respect of the carrying values of
the company's investments and intangible assets, and considered
future events that are inherently uncertain. We also addressed the
risk of management override of internal controls, including evaluation
whether there was evidence of bias by the directors that represented
a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgment,
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) we
identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Valuation of Intangible Assets (Notes
12 and 16)
The company has capitalised deferred Our work in this area included
exploration and evaluation expenditure. but was not limited to:
Management are required to ensure * Enquiring with the management as to whether any
that only costs which meet the IFRS offers were received during the year, or post
criteria of an asset and accord year-end, for the assets. Comparing the value of
with the company's accounting policy these offers to the current value of the assets and
are capitalised. Additionally, the consider whether an impairment is required;
management are actively pursuing
several markets on potentially selling
the assets. There is a risk that * Reviewing disclosures made in respect of the assets
these are not accounted for in accordance and ensuring these are accurate and in accordance
with IFRS 5. Specifically, there with IFRS 5;
is a risk that the assets are incorrectly
classified as held for sale.
Given that the assets were not sold * Reviewing disclosures made in respect of any linked
during the year, there is also a liabilities as these will need to be separately
risk that the fair value of the disclosed under IFRS 5; and
assets have decreased further and
thus an impairment may be required
but may not have been accounted * Reviewing management's assessment of the valuation
for by the management. and impairment of intangible assets. Challenging
Given the significance of the intangible management assumptions and estimates and ensuring
non-current assets on the company's reasonableness.
Statement of Financial Position
and the significant management judgement
involved in the determination and It was noted that the investment
the assessment of the carrying values in Corallian Energy Limited was
of these assets, there is increased incorrectly classified as an intangible
risk of material misstatement or asset in the prior year. This
that the values will not be recovered has subsequently been reclassified
due to the inherent uncertainties as an unquoted equity investment.
which exist with oil and gas exploration This restatement has no overall
activities. impact on the equity as reported
at 31 December 2019.
Valuation and impairment of Investments
(Note 14)
The company held investments with Our work in this area included;
a value of GBP1.5m as at 31 December * Reviewing the valuation methodology for the
2020. These are valued in accordance investment held and ensuring that the carrying values
with IFRS 13 and the fair value are supported by sufficient and appropriate audit
hierarchy; and classified as per evidence;
IFRS 9.
There is the risk that these investments
have not been valued in accordance * Ensuring that all asset types are categorised
with IFRS 13 and IFRS 9 and an impairment according to IFRS, including the accounting
may be required but may not have disclosures as required under IFRS 9;
been accounted for by the management.
* Reviewing the movement in investments to ensure it is
accounted for and disclosed correctly in line with
IFRS 9;
* Reviewing disclosures in relation to the said assets;
* Ensuring that Scirocco Energy Plc has full title to
the investments held;
* Ensuring that appropriate disclosures surrounding the
estimates made in respect of any valuations are
included in the financial statements; and
* Consider whether the transactions have been accounted
for correctly within the financial statements.
Our work indicated that the investments
are fairly stated in the financial
statements.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our auditor's
report thereon. The directors are responsible for the other information
contained within the annual report. 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 course of 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the
audit:
* the information given in the strategic report and the
directors' report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
* the strategic report and the directors' report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and
its 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 in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
* adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
* the financial statements are not in agreement with
the accounting records and returns; or
* certain disclosures of directors' remuneration
specified by law are not made; or
* we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement,
the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the company or to cease operations, or
have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level
of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on
the basis of these financial statements.
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:
* We obtained an understanding of the company and the
sector in which it operates to identify laws and
regulations that could reasonably be expected to have
a direct effect on the financial statements. We
obtained our understanding in this regard through
discussions with management, industry research,
application of cumulative audit knowledge and
experience of the sector etc. This is evidenced by
discussion of laws and regulations with the
management, reviewing regulatory news service
announcements and minutes of meetings of those
charged with governance, and review of legal or
professional expenditures.
* We determined the principal laws and regulations
relevant to the company in this regard to be those
arising from Companies Act 2006, AIM rules, GDPR,
Employment Law, Health and Safety Law, Anti-Bribery
and Money Laundering Regulations and QCA compliance.
* We designed our audit procedures to ensure the audit
team considered whether there were any indications of
non-compliance by the company with those laws and
regulations. These procedures included, but were not
limited to:
- Discussion with management regarding potential non-compliance;
- Review of legal and professional fees to understand the nature
of the costs and the existence of any non-compliance with laws and
regulations; and
- Review of minutes of meetings of those charged with governance
and regulatory news service announcements
* We also identified the risks of material misstatement
of the financial statements due to fraud. We
considered, in addition to the non-rebuttable
presumption of a risk of fraud arising from
management override of controls, that the potential
for management bias was identified in relation to the
carrying value of the investments and intangible
assets.
* As in all of our audits, we addressed the risk of
fraud arising from management override of controls by
performing audit procedures which included, but were
not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and
evaluating the business rationale of any significant
transactions that are unusual or outside the normal
course of business and review of bank statements
during the year to identify any large and unusual
transactions where the business rationale is not
clear.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance
with regulation. This risk increases the more that compliance with
a law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely
to become aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud rather than
error, as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council's
website at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them
in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone, other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we
have formed.
Zahir Khaki (Senior Statutory Auditor)
for and on behalf of PKF Littlejohn
LLP
Statutory Auditor
15 Westferry Circus, London, E14
4HD
Date: 14 June 2021
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2020
2020 2019
Notes GBP000 GBP000
Continuing operations
Administrative expenses 6 (3,323) (2,558)
Loss before investment activities 6 (3,323) (2,558)
Other gains and losses 8 - (63)
Loss before taxation (3,323) (2,621)
Income tax expense 9 - -
Loss for the year from continuing
operations (3,323) (2,621)
Discontinued operations 10
Assets held for sale 15 60
Loss recognised on classification as held
for sale (810) -
(Loss)/profit for the year from discontinuing
operations (795) 60
Loss and total comprehensive
income for the year (4,118) (2,561)
Total comprehensive Income attributable
to owners of the parent (4,118) (2,561)
Earnings per share (pence)
Basic and diluted 11 (0.57) (0.41)
Earnings per share from continuing operations
Basic and diluted (0.46) (0.42)
Earnings per share from discontinued operations
Basic and diluted (0.11) 0.01
The accounting policies and notes on pages 43 to 77 form part of
these financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
31 Dec 31 Dec
2020 2019
Restated
Notes GBP000 GBP000
Non-current assets
Intangible assets 12 - 14,967
Oil & gas properties 13 - 358
Investments 14 1,667 3,052
1,667 18,377
Current assets
Trade and other receivables 17 421 1,437
Cash and cash equivalents 1,168 1,064
Assets held for sale 16 14,803 -
16,392 2,501
Total assets 18,059 20,878
Current liabilities
Trade and other payables 18 248 365
Provisions 19 - 184
Liabilities held for sale 16 166 -
414 549
Net current assets 15,978 1,952
Non-current liabilities
Long term provisions 19 - 168
Total liabilities 414 717
Net assets 17,645 20,161
Equity
Called up share capital 20 1,448 1,264
Share premium account 21 38,399 37,316
Deferred share capital 20 1,831 1,831
Share based payments 22 1,470 1,135
Retained earnings (25,503) (21,385)
Total equity 17,645 20,161
The accounting policies and notes on pages 43 to 77 form part of
these financial statements.
The financial statements were approved by the board of directors
and authorised for issue on 14 June 2021 and are signed on its behalf
by:
Mr Tom Reynolds
Director
Date: 14 June 2021
Company Registration No. 05542880
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2020
Share Share Deferred Share-based Retained Total
capital premium share payments earnings
account capital
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January 2019 1,264 37,316 1,831 1,135 (18,824) 22,722
Year ended 31
December 2019:
Loss and total
comprehensive
income for the
year - - - - (2,561) (2,561)
Balance at 31
December 2019 1,264 37,316 1,831 1,135 (21,385) 20,161
Year ended 31
December 2020:
Loss and total
comprehensive
income for the
year - - - - (4,118) (4,118)
Issue of share
capital 20 184 1,083 - - - 1,267
Credit to
equity for
equity-settled
share-based
payments 22 - - - 335 - 335
Balance at 31 December
2020 1,448 38,399 1,831 1,470 (25,503) 17,645
The accounting policies and notes on pages 43 to 77 form part of these financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2020
2020 2019
as restated
Notes GBP000 GBP000 GBP000 GBP000
Cash flows from operating activities
Cash absorbed by continuing
operations 28 (877) (2,514)
Interest paid (3) (12)
Net cash outflow from operating
activities (880) (2,526)
Investing activities
Purchase of intangible assets (293) (147)
Proceeds on disposal of intangibles - 1,668
Payments to acquire investments - (854)
Proceeds on disposal of investments 10 -
Increase in loans and receivables - (76)
Net cash (used in)/generated
from investing activities (283) 591
Financing activities
Proceeds from issue of shares 1,267 -
Net cash generated from financing
activities 1,267 -
Net increase/(decrease) in cash
and cash equivalents 104 (1,935)
Cash and cash equivalents at beginning
of year 1,064 2,999
Cash and cash equivalents
at end of year 1,168 1,064
The accounting policies and notes on pages 43 to 77 form part of
these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2020
1 Accounting policies
Company information
Scirocco Energy plc ("Scirocco", the "Company") is a public listed
company incorporated in England & Wales. The address of its registered
office 1 Park Row, Leeds, United Kingdom, LS1 5AB. The Company's
ordinary shares are traded on the AIM Market operated by the
London Stock Exchange. The financial statements of Scirocco Energy
plc for the year ended 31 December 2020 were authorised for issue
by the Board on 11 June 2021 and the statement of financial position
is signed on the Board's behalf by Mr Reynolds.
Investing policy
Scirocco's investing policy is to acquire a diverse portfolio
of direct and indirect interests in exploration, development
and production oil and gas assets, and any other subsurface gas
assets of potential commercial significance, located worldwide
but predominantly in the Americas, Europe or Africa.
The Company may invest by way of outright acquisition or by the
acquisition of assets, including the intellectual property, of
relevant business, partnerships or joint venture arrangements.
Such investments may result in the Company acquiring the whole
part of a company or project (which in the case of an investment
in a company may be private or listed on a stock exchange, and
which may be pre-revenue), may constitute a minority stake in
the Company or project in question and may take the form of equity,
joint venture debt, convertible instruments, license rights,
or other financial instruments as the Directors deem appropriate.
Scirocco intends to be a long-term investor and the Directors
will place no minimum or maximum limit on the length of time
that any investment may be held.
There is no limit on the number of projects into which the Company
may invest, nor the proportion of the Company's gross assets
that any investment may represent at any time and the Company
will consider possible opportunities anywhere in the world.
All of Scirocco's assets will be held in its own name, or through
wholly owned subsidiaries.
Statement of compliance with IFRS
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and as applied
in accordance with the provisions of the Companies Act 2006.
The principal accounting policies adopted by the Company are
set out below.
Accounting convention
The financial statements have been prepared on the historical
cost basis, except for the measurement to fair value of assets
and financial instruments as described in the accounting policies
below, and on a going concern basis.
The financial report is presented in Pound Sterling (GBP) and
all values are rounded to the nearest thousand pounds (GBP'000)
unless otherwise stated. The functional currency of the company
is also GBP.
1 Accounting policies
Going concern
The Directors noted the losses that the Company has made for
the year ended 31 December 2020. The Directors have prepared
cash flow forecasts for the period ending 31 December 2022 which
take account of the current costs and operational structure of
the Company.
The cost structure of the Company comprises a high proportion
of discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the
Company to operate within its available funding.
These forecasts, demonstrate that the Company has sufficient
cash resources available, on the assumption that further funds
can be sourced as and when needed, to allow it to continue in
business for a period of at least twelve months from the date
of approval of these financial statements. Accordingly, the financial
statements have been prepared on a going concern basis.
In their assessment of going concern the directors have considered
the current impact on the business as a result of the COVID-19
virus and the oil price crash, including revisions where required
to budgets and projections. The COVID-19 pandemic has not had
a significant, immediate impact on the Company's operations.
Having regard to the above, the directors continue to believe
it appropriate to adopt the going concern basis of accounting
in preparing the financial statements. The financial statements
do not include any adjustments that may result from any significant
changes in the assumptions noted above in preparing the financial
statements on a going concern basis.
It is the prime responsibility of the Board to ensure the Company
remains a going concern. The Company has sufficient funding to
meet their debts as they fall due. At 31 December 2020 the Company
had cash and cash equivalents of GBP1,168k and borrowings of
GBPnil. The Company has minimal contractual expenditure commitments
and the Board considers the present funds sufficient to maintain
the working capital of the Company for a period of at least 12
months from the date of signing in the Annual Report and Financial
Statements taking into account the current COVID-19 and oil price
environment. For these reasons the Directors adopt the going
concern basis in the preparation of the Financial Statements.
Intangible assets
Externally acquired intangible assets comprising deferred exploration
and evaluation expenditure are initially recognised at cost in
compliance with IFRS 6 "Exploration for an evaluation of mineral
resources."
The Company follows the successful efforts method of accounting
for exploration and evaluation expenditure. All license, acquisition
and exploration and evaluation costs are capitalised in cost
centres by area of interest pending determination of the commercial
viability of the relevant product.
1 Accounting policies
Impairment of tangible and intangible assets
At each balance sheet date the Company reviews the carrying amounts
of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment
loss. If there is such indication then an estimate of the asset's
recoverable amount is performed and compared to the carrying
amount.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted at their present value. Where
the asset does not generate cash flows that are independent from
other assets, the Company estimated the recoverable amount of
the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the assets is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately, unless the relevant asset is carried
at a re-valued amount, in which case the impairment loss is treated
as a revaluation decrease,
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset in prior
periods. A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a re-valued
amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Current assets held for sale
Current assets are classified as assets held for sale when their
carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are
stated at the lower of carrying amount and fair value less costs
to sell.
Discontinued operations
In accordance with IFRS 5 'Non-current assets held for sale and
discontinued operations', the net results relating to the assets
held for sale are presented within discontinued operations in
the income statement (for which the comparatives have been restated)
and the assets and liabilities of these operations are presented
separately in the balance sheet. Refer to note 10 for further
details.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair
value measurements. IFRS 13 does not change when an entity is
required to use fair value, but rather provides guidance on how
to measure fair value under IFRS when fair value is required
or permitted. The resulting calculations under IFRS 13 affected
the principles that the Company uses to assess the fair value,
but the assessment of fair value under IFRS 13 has not materially
changed the fair values recognised or disclosed. IFRS 13 mainly
impacts the disclosures of the Company. It requires specific
disclosures about fair value measurements and disclosures of
fair values, some of which replace existing disclosure requirements
in other standards. There is one financial instrument measured
at fair value, details of which can be seen at Note 23.
Cash and cash equivalents
Cash in the statement of financial position comprise cash at
banks and on hand, which are subject to an insignificant risk
of changes in value.
1 Accounting policies
Financial instruments
Financial assets and financial liabilities are recognised on
the balance sheet when the Company has become a party to the
contractual provisions of the instrument.
Classification
The company classifies its financial assets and liabilities in
the following measurement categories:
* those to be measured subsequently at fair value
(either through Other Comprehensive Income or through
profit or loss); and
* those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the
cash flows.
Recognition and measurement
A financial instrument is recognised if the Company becomes a
party to the contractual provisions of the instrument. Financial
assets are derecognised if the Company's contractual rights to
the cash flows from the financial assets expire or if the Company
transfers the financial asset to another party without retaining
control or substantially all risks and rewards of the asset.
Regular way purchases and sales of financial assets are accounted
for at trade date, i.e. the date the Company commits itself to
purchase or sell the asset.
At initial recognition, the Company measures a financial asset
at its fair value plus, in the case of a financial asset not
at fair value through profit or loss ("FVTPL"), transaction costs
that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVTPL
are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Company's
business model for managing the asset and the cash flow characteristics
of the asset. Currently, the Company's financial assets are all
held for collection of contractual cash flows, which are solely
payments of principal and interest. Accordingly, the Company's
financial assets are measured subsequent to initial recognition
at amortised cost.
Impairment
On a forward-looking basis, the Company estimates the expected
credit losses associated with its receivables and other financial
assets carried at amortised cost and records a loss allowance
for these expected losses.
Trade and other receivables
Trade and other receivables outside of normal payment terms accrue
interest at a rate determined by the operator and are stated
at their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts.
Financial liability and equity
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of
its liabilities.
Trade and other payables
Trade and other payables are non-interest bearing and are stated
at their nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs
1 Accounting policies
Equity reserves
Share capital is determined using the nominal value of shares
that have been issued.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs associated
with the issuing of shares are deducted from share premium, net
of any related income tax benefits.
The share based payment reserve represents the cumulative amount
which has been expensed in the income statement in connection
with share based payments, less any amounts transferred to retained
earnings on the exercise of share options.
FVOCI reserve represents the market value movement of FVOCI investments.
Retained earnings includes all current and prior period results
as disclosed in the income statement.
Taxation
The tax expense represents the sum of the current tax and deferred
tax.
Current tax
The current tax is based on taxable profit for the period. Taxable
profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable
or deductible in other periods and it further excludes items
that are never taxable or deductible. The liability for current
tax is calculated by using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities
are recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill
or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction which affects
neither the tax profit not the accounting profit.
Provisions
Provisions are recognised for liabilities of uncertain timings
or amounts that have arisen as a result of past transactions
and are discounted at a pre-tax rate reflecting current market
assessments of the time value of money and the risks specific
to the liability.
1 Accounting policies
Share-based payments
Where share options are awarded to employees, the fair value
of the options at the date of grant is charged to the income
statement over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments
expected to vest at each balance sheet date so that, ultimately,
the cumulative amount recognised over the vesting period is based
on the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted.
As long as all other vesting conditions are satisfied, a charge
is made irrespective of whether the market vesting conditions
are satisfied. The cumulative expense is not adjusted for failure
to achieve a market vesting condition.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged
to the income statement over the remaining vesting period.
Where equity instruments are granted to persons other than employees,
the income statement is charged with the fair value of goods
and services received. Equity-settled share-based payments are
measured at a fair value at the date of grant except if the value
of the service can be reliably established. The fair value determined
at the grant date of equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the
Company's estimate of shares that will eventually vest.
Foreign exchange
Transactions in currencies other than Sterling are recorded at
the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Gains and losses
arising on retranslation are included in the income statement
for the period.
1 Accounting policies
Oil and gas properties and other property, plant and equipment
(i) Initial recognition
Oil and gas properties and other property, plant and equipment
are stated at cost, less accumulated depreciation and accumulated
impairment losses.
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 decommissioning
obligation and, for qualifying assets (where relevant), borrowing
costs. The purchase price or construction cost is the aggregate
amount paid and the fair value of any other consideration given
to acquire the asset. The capitalised value of a finance lease
is also included within property, plant and equipment.
When a development project moves into the production stage, the
capitalisation of certain construction/development costs ceases,
and costs are either regarded as part of the cost of inventory
or expensed, except for costs which qualify for capitalisation
relating to oil and gas property asset additions, improvements
or new developments.
(ii) Depreciation/amortisation
Oil and gas properties are depreciated/amortised on a unit-of
production basis over the total proved developed and undeveloped
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/amortisation
of field development costs takes into account expenditures incurred
to date, together with sanctioned future development expenditure.
An item of property, plant and equipment and any significant
part initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of profit or
loss and other comprehensive income when the asset is derecognised.
The asset's residual values, useful lives and methods of depreciation/amortisation
are reviewed at each reporting period and adjusted prospectively.
(iii) Major maintenance, inspection and repairs
Expenditure on major maintenance refits, inspections or repairs
comprises the cost of replacement assets or parts of asset, inspection
costs and overhaul costs. Where an asset, or part of an asset
that was separately depreciated and is now written off is replaced
and it is probably that future economic benefits associated with
the item will flow to the Company, the expenditure will be capitalised.
Where part of the asset replaced was not separately considered
as a component and therefore not depreciated separately, the
replacement value is used to estimate the carrying amount of
the replaced asset(s) and is immediately written off. Inspection
costs associated with major maintenance programmes are capitalised
and amortised over the period of the next inspection. All other
day-to-day repairs and maintenance costs are expensed as incurred.
1 Accounting policies
Provision for rehabilitation / Decommissioning Liability
The Company recognises a decommissioning liability where it has
a present legal or constructive obligation as a result of past
events, and it is probably that an outflow of resources will
be required to settle the obligation, and a reliable estimate
of the amount of obligation can be made.
The obligation generally arises when the asset is installed or
the ground/environment is disturbed at the field location. When
the liability is initially recognised, the present value of the
estimated costs is capitalised by increasing the carrying amount
of the related oil and gas assets to the extent that it is incurred
by the development/construction of the field. Any decommissioning
obligations that arise through the production of inventory are
expensed when the inventory item is recognised in cost of goods
sold.
Changes in the estimated timing or cost of decommissioning are
dealt with prospectively by recording an adjustment to the provision
and a corresponding adjustment to oil and gas assets. Any reduction
in the decommissioning liability and, therefore, any deduction
from the asset to which it relates, may not exceed the carrying
amount of that asset. If it does, any excess over the carrying
value is taken immediately to the statement of profit or loss
and other comprehensive income.
Segmental reporting
A business segment is a group of assets or operations engaged
in providing services that are subject to risks and returns that
are different from those of other business segments. A geographical
segment is engaged in providing services within a particular
economic environment that is subject to different risks and returns
from other segments in other economic environments. The company
has two segments; corporate head office costs and Tanzania.
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
(CODM). The CODM, who is responsible for allocating resources
and assessing performance of the operating segments, has been
identified as Thomas Reynolds that makes strategic decisions.
Segment results include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
Investments
The Company's financial asset investments are classified and
measured at fair value, under IFRS 9, with changes in fair value
recognised in profit and loss as they arise.
Gains and losses on investments disposed of or identified are
included in the net profit or loss for the period.
Investments held by the Company are held for resale. Therefore
where the Company's equity stake in an investee company is 20%
or more equity accounting for associates is not considered to
be appropriate.
2 Adoption of new and revised standards and changes in accounting
policies
In the current year, the following new and revised Standards
and Interpretations have been adopted by the Company. The adoption
of these standards has had no impact on the current period however
may have an effect on future periods.
Conceptual Framework Amendments to References to 1 January
the Conceptual Framework in 2020
IFRS standards.
IAS 1 and IAS 8 (Amendments) Definition of material 1 January
2020
IFRS9, IAS 39 and IFRS Interest Rate Benchmark Reform 1 January
7 (Amendments) 2020
IFRS 3 (Amendments) Definition of a business 1 January
2020
IFRS 16 (Amendments) Covid-19-related Rent Concessions 1 June 2020
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the
following Standards and Interpretations, which have not yet been
applied in these financial statements, were in issue but not
yet effective (and in some cases had not yet been adopted by
the EU):
IFRS 7 Insurance Contracts 1 January
2023
IFRS 4 (Amendments) Insurance Contracts 1 January
2023
IAS 1 (Amendments) Classification of Liabilities 1 January
as Current or Non-Current 2023
IAS 16 (Amendments) Property plant and equipment- 1 January
proceeds before intended use 2022
Annual Improvements Amendments to IFRS 1 (subsidiary 1 January
2018-2020 Cycle as a first-time adopter), IFRS 2022
9 (fees in the '10 percent'
test for derecognition of financial
liabilities), IFRS 16 (lease
incentives), IAS 41 (taxation
in the fair value measurements)
IFRS 3 (Amendments) References to the Conceptual 1 January
Framework 2022
IAS 37 (Amendments) Onerous contracts - Cost of 1 January
Fulfilling a Contract 2022
IFRS 4 (Amendments) Extension of the Temporary 1 January
Exemption from Applying IFRS 2023
9
The directors do not expect that the adoption of the other Standards
listed above will have a material impact on the financial statements
of the Company aside from additional disclosures.
3 Critical accounting estimates and judgements
The Company makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from these estimates
and assumptions. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
discussed below.
The preparation of the Financial Statements in conformity with
IFRS requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amount of expenses during the period.
Actual results may vary from the estimates used to produce these
Financial Statements.
Estimates and judgements are regularly evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Items subject to such estimates and assumptions, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial years,
include but are not limited to:
Useful lives of intangible assets and property, plant and equipment
(note 12)
Intangible assets and property, plant and equipment are amortised
or depreciated over their useful lives. Useful lives are based
on the management's estimates of the period that the assets will
generate revenue, which are based on judgement and experience
and periodically reviewed for continued appropriateness. Changes
to estimates can result in significant variations in the carrying
value and amounts charged to the income statement in specific
periods.
Share-based payments (note 22)
The Company utilised an equity-settled share-based remuneration
scheme for employees. Employee services received, and the corresponding
increase in equity, are measured by reference to the fair value
of the equity instruments at the date of grant, excluding the
impact of any non-market vesting conditions. The fair value of
share options are estimated by using Black-Scholes valuation
method as at the date of grant. The assumptions used in the valuation
are described in Note 22 and include, among others, the expected
volatility, expected life of the options and number of options
expected to vest.
Deferred taxation (note 9)
Deferred tax assets are recognised when it is judged more likely
than not that they will be recovered. Deferred tax assets are
currently nil based on the likelihood of recovery.
3 Critical accounting estimates and judgements
Hydrocarbon reserve and resource estimates (note 13)
Hydrocarbon reserves are estimates of the amount of hydrocarbons
that can be economically and legally extracted from the Company's
oil and gas properties. The Company estimates its commercial
reserves and resources based on information compiled by appropriately
qualified persons relating to the geological and technical data
on the size, depth, shape and grade of the hydrocarbon body and
suitable production techniques and recovery rates. Commercial
reserves are determined using estimates of oil and gas in place,
recovery factors and future commodity prices, the latter having
an impact on the total amount of recoverable reserves and the
proportion of the gross reserves which are attributable to the
host government under the terms of the Production-Sharing Agreements.
A breakdown of reserves can be found below. Future development
costs are estimated using assumptions as to the number of wells
required to produce the commercial reserves, the cost of such
wells and associated production facilities, and other capital
costs. The current long-term gas price assumption used in the
estimation of commercial reserves currently held by the Company
is US$3/MMTBU. The carrying amount of oil and gas development
and production assets at 31 December 2020 is shown in note 13.
The Company estimates and reports hydrocarbon reserves in line
with the principles contained in the SPE Petroleum Resources
Management Reporting System (PRMS) framework. As the economic
assumptions used may change and as additional geological information
is obtained during the operation of a field, estimates of recoverable
reserves may change. Such changes may impact the Company's financial
position and results which include:
* The carrying value of exploration and evaluation
assets; oil and gas properties; property and plant
and equipment may be affected due to changes in
estimated future cash flows
* Depreciation and amortisation charges in the income
statement may change where such charges are
determined using the Units of Production (UOP) method,
or where the useful life of the related assets change
* Provisions for decommissioning may require revision -
where changes to the reserve estimates affect
expectations about when such activities will occur
and the associated cost of these activities.
Resource summary - Ntorya Field
Gross Licence Basis (bcf)
Gross Mean
unrestricted
Licence 1C 2C 3C GIIP
Development
Mtwara pending 26 81 213
Development
Mtwara unclarified 324 682 950 1,870
763
Resource summary excluding Ntorya Field
Prospective Resources (bcf)*
Gross on Licence
Prospect/Lead 1U 2U 3U Mean unrisked Pg %
Chikumbi Jurassic 399 936 1,798 1,351** 8***
Namisange 56 235 1,925 1,183 8***
Likonde updip 39 166 702 444 10***
Ziwani NW 8 35 153 68 <5***
Ziwani SW 12 54 236 105 <5***
* Assuming development licence is *** RPS assessment of PG
ratified
** P50
3 Critical accounting estimates and judgements
Exploration and evaluation expenditures (note 13)
The application of the Company's accounting policy for exploration
and evaluation expenditure requires judgement to determine whether
future economic benefits are likely, from either future exploitation
or sale, or whether activities have not reached a stage which
permits a reasonable assessment of the existence of reserves.
The determination of reserves and resources is itself an estimation
process that involves varying degrees of uncertainty depending
on how the resources are classified. These estimates directly
impact when the Company defers exploration and evaluation expenditure.
The deferral policy requires management to make certain estimates
and assumptions about future events and circumstances, in particular,
whether an economically viable extraction operation can be established.
Any such estimates and assumptions may change as new information
becomes available. If, after expenditure is capitalised, information
becomes available suggesting that the recovery of the expenditure
is unlikely, the relevant capitalised amount is written off in
the income statement and in the period when the new information
becomes available.
Units of production (UOP) depreciation of oil and gas assets
(note 13)
Oil and gas properties are depreciated using the UOP method over
total proved development and undeveloped hydrocarbon reserves.
This results in a depreciation/amortisation charge proportional
to the depletion of the anticipated remaining production from
the field.
The life of each item, which is assessed at least annually, has
regard to both its physical life limitations and present assessments
of economically recoverable reserves of the field at which the
asset is located. These calculations require the use of estimates
and assumptions, including the amount of recoverable reserves
and estimates of future capital expenditure. The calculation
of the UOP rate of depreciation/amortisation will be impacted
to the extent that actual production in the future is different
from current forecast production based on total proved reserves,
or future capital expenditure estimates change. Changes to the
proved reserves could arise due to changes in the factors or
assumptions used in estimating reserves, including:
* The effect on proved reserves of differences between
actual commodity prices and commodity price
assumptions
* Unforeseen operational issues
Recoverability of oil and gas assets (note 14)
The Company assesses each asset or cash generating unit (CGU)
each reporting period to determine whether any indication of
impairment exists. Where an indicator of impairment exists, a
formal estimate of the recoverable amount is made, which is considered
to be the higher of the fair value less costs of disposal (VLCD)
and value in use (VIU). The assessments require the use of estimates
and assumptions such as long-term oil prices (considering current
and historical prices, price trends and related factors), discount
rates, operating costs, future capital requirements, decommissioning
costs, exploration potential reserves (see(a) Hydrocarbon reserves
and resource estimates above) and operating performance (which
includes production and sales volumes). These estimates and assumptions
are subject to risk and uncertainty. Therefore, there is possibility
that changes in circumstances will impact these projections,
which may impact the recoverable amount of assets and/or CGUs.
Decommissioning provisions (note 19)
There is uncertainty around the cost of decommissioning as cost
estimates can vary in response to many factors, including changes
to the relevant legal requirements, the emergence of new technology
or experience at other assets. The expected timing, work scope
and amount and currency mix of expenditure may also change. Therefore,
significant estimates and assumptions are made in determining
the provision for decommissioning.
The estimated decommissioning costs are reviewed annually by
an internal expert from the joint venture partner. Provision
for environmental clean-up and remediation costs is based on
current legal and contractual requirements, technology and management's
estimate of costs with reference to current price levels. Future
cost estimates are discounted to present value using a rate that
approximates the time value of money, which is currently 5.89%.
The discount rate is based on the average yield on Tanzanian
Government bonds for foreign currency loans of a duration of
more than 10 years.
3 Critical accounting estimates and judgements
Recoverability of trade receivables (note 17)
The Company considers the recoverability of trade receivables
to be a key area of judgement. The Company considers trade receivables
to be credit impaired once there is evidence a loss has been
incurred. An expected credit loss is calculated on an annual
basis. The directors believe that the debtor is still recoverable
based on their knowledge of the market in Tanzania and historical
evidence of similar receivables being paid. The Directors have
recognised the asset as they believe they are still legally entitled
to receive it. The Tanzanian Government have a history of building
up receivables with other companies and billing them at a future
date.
4 Operating Segments
Based on risks and returned, the directors consider that the primary
reporting format is by business segment. The directors consider
that there are two business segments:
* Head office support from the UK
* Segment assets for Canada relate to an investment in
Corallian Energy
* Discontinued operations on its investments in
Tanzania
Continuing Operations Discontinuing
Operations
2020 Canada UK Total Tanzania Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue - - - - -
Administrative expenses - (3,323) (3,323) - (3,323)
Interest income - - - 18 18
Finance costs - - - (3) (3)
Other gains and losses - - - (810) (810)
Other income - - - - -
Profit/(Loss) from
operations
per reportable segment - (3,323) (3,323) (795) (4,118)
Additions to
non-current
assets - - - 293 293
Reportable segment
assets 125 1,296 1,421 17,476 18,897
Reportable segment
liabilities - 249 249 166 415
4 Operating Segments
2019 Canada UK Total Tanzania Total
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue - - - 17 17
Administrative expenses - (2,558) (2,558) - (2,558)
Interest income - - - 55 55
Finance costs - - - (12) (12)
Other gains and losses (67) 4 (63) - (63)
Other income - - - - -
Profit/(Loss) from operations
per reportable segment (67) (2,554) (2,621) 60 (2,561)
Additions to non-current
assets - - - 337 337
Reportable segment assets 125 2,168 2,293 18,585 20,878
Reportable segment liabilities - 549 549 168 717
5 Revenue
2020 2019
GBP000 GBP000
Other significant revenue
Interest income 18 55
2020 2019
Contract balances
2020 2019
GBP000 GBP000
Trade receivables 272 283
Accrued income and interest 90 76
Trade receivables accrued interest for non-payment. Outstanding
debtors accrue interest at a rate in accordance with the joint
venture agreement and are generally on terms of 30 days. In
2020, there is a provision of GBP55k (2019: GBP28k) for expected
credit losses on trade receivables.
Interest income relates to interest charged on outstanding
invoices.
An operating segment is a distinguishable component of the
Company that engages in business activities from which it may
earn revenues and incur expenses, whose operating results are
regularly reviewed by the Company's chief operating decision
maker to make decisions about the allocation of resources and
assessment of performance and about which discrete financial
information is available.
6 Expenses by Nature
2020 2019
Continuing Operations GBP000 GBP000
Exchange losses 68 65
Fees payable to the Company's auditor for the
audit of the Company's financial statements 36 23
Professional, legal and consulting fees 617 855
AIM related costs including investor relations 136 246
Costs relating to OneDYAS transaction 640 653
Accounting related services 114 196
Travel and subsistence 17 85
Office and administrative expenses 47 46
Other expenses 72 19
Impairment losses 1,384 -
Share-based payments 335 -
Directors remuneration (206) 299
Wages and salaries and other related costs 63 71
3,323 2,558
7 Employees
The average number of employees (excluding executive directors)
was nil (2019: nil).
During the year ended 31 December 2020 the Directors opted to
receive remuneration in the form of share options in lieu of
fees (note 22).
There was one employee during the year ended 31 December 2019
who resigned in March 2019.
2020 2019
GBP000 GBP000
Their aggregate remuneration comprised:
Wages and salaries - 8
Directors remuneration (206) 299
7 Employees
Salary and Share-based Termination Total
fees payments payments
GBP000 GBP000 GBP000 GBP000
Year ended 31 December 2020
Jonathan Fitzpatrick 6 67 - 73
Alastair Ferguson (44) 143 - 99
Tom Reynolds 16 57 - 73
Donald Nicolson 6 57 - 63
Don Strang (resigned 26 November
2018) (6) - - (6)
Dan Maling (resigned 7 February
2019) (184) - - (184)
Doug Rycroft (senior management) - 13 13
(206) 335 - 129
Salary and Share-based Termination Total
fees payments payments
GBP000 GBP000 GBP000 GBP000
Year ended 31 December 2019
Dan Maling (resigned 7 February
2019) 38 - - 38
Jonathan Fitzpatrick 62 - - 62
Alastair Ferguson 134 - - 134
Tom Reynolds 52 - - 52
Donald Nicolson (appointed
11 November 2019) 8 - - 8
Don Strang (resigned 26 November
2018) 5 - - 5
299 - - 299
No directors received pension contributions in 2020 or 2019.
8 Other gains and losses
2020 2019
GBP000 GBP000
Loss on disposal of shares in Deloro Energy - (67)
Loss on disposal of UKOG Shares - (236)
Gain on disposal of UKOG PEDL 331 - 240
- (63)
9 Income tax expense
2020 2019
GBP000 GBP000
UK corporation tax on profits for the current
period - -
Total UK current tax - -
Deferred tax
Origination and reversal of temporary differences - -
- -
Total tax charge - -
The charge for the year can be reconciled to the loss per the
income statement as follows:
2020 2019
GBP000 GBP000
Loss before taxation (4,119) (2,561)
The reason for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the UK applied
to profits for the year are as follows:
Expected tax credit based on a corporation tax
rate of 19.00% (2019: 19.00%) (783) (487)
Effect of expenses not deductible in determining
taxable profit 442 201
Income not taxable (2) -
Other non-reversing timing differences (14) -
Deferred tax not recognised 596 256
Adjust deferred tax to average rate of 19.00% - 30
Remeasurement of deferred tax for changes in
tax rates (239) -
Taxation charge for the year - -
No deferred tax asset has been recognised because there is uncertainty
of the timing of suitable future profits against which they can
be recovered. The company has losses carried forward of GBP5,162k
(2019: GBP2,347k).
10 Discontinued operations
The Company has a 25% interest in a high-quality development
project in Tanzania which the Directors are actively seeking
to monetise. This stake has been valued at $20m and operations
relating to this stake are detailed below.
The results of the discontinued business, which have been included
in the income statement, balance sheet and cash flow statement,
were as follows:
2020 2019
GBP000 GBP000
Revenue - 17
Impairment on fair value revaluation (810) -
Investment revenues 18 55
Finance costs (3) (12)
(Loss)/profit before taxation (795) 60
Net (loss)/profit attributable to discontinuation (795) 60
The loss after tax on disposal of the assets held for
sale is made up as follows:
GBP000
Fair value less costs to sell 14,637
Net book value of assets disposed:
Intangible assets (15,259)
Oil and gas properties (354)
Decommissioning provision 166
(15,447)
Impairment on fair value revaluation (810)
Loss per share impact from discontinued
operations
2020 2019
Basic and diluted impact (pence) (0.11) 0.01
Cash flow statement
2020 2019
GBP000 GBP000
Net cash flows from investing
activities (237) (147)
Net cash flows from discontinued
operations (237) (147)
11 Earnings per share
The calculation of loss per share is based on the loss after taxation
divided by the weighted average number of shares in issue during
the year.
2020 2019
Number of shares
Weighted average number of ordinary shares for
basic loss per share (000) 723,950 631,704
Earnings GBP000 GBP000
Continuing operations
Loss for the period from continued operations (3,323) (2,621)
Discontinued operations
(Loss)/profit for the period from discontinued
operations (795) 60
Basic and diluted earnings per share
From continuing operations (pence per share) (0.46) (0.42)
From discontinued operations (pence per share) (0.11) 0.01
(0.57) (0.41)
As inclusion of the potential ordinary shares would result in
a decrease in the loss per share they are considered to be anti-dilutive,
as such, a diluted loss per share is not included.
12 Intangible assets
Exploration and
evaluation expenditure
GBP000
Cost
At 1 January 2019 (as restated) 17,652
Additions 237
Disposals (264)
At 1 January 2020 (as restated) 17,625
Additions 293
Disposals (2,658)
Transfer to held for sale (15,260)
At 31 December 2020 -
Impairment
At 1 January 2018 and 2019 2,658
Eliminated on disposals (2,658)
At 31 December 2020 -
Carrying amount
At 31 December 2020 -
At 31 December 2019 14,967
The additions to deferred exploration and evaluation expenditure
during the period relate to the completion of drilling operations
for the Ntorya-2 appraisal and subsequent testing of the well.
During the year to 31 December 2020 the interest in Ausable Reef
was fully disposed for nominal consideration and no gain or loss
was recognised because the asset was fully impaired at the date
of disposal.
All the date of authorisation of these financial statements the
Directors were actively seeking sale of all Tanzanian intangible
assets and the assets were reclassified as held for sale at 31
December 2020 (note 16).
Following a review of the carrying value and future prospects
for Scirocco's assets no impairment has been recognised as the
carrying value is deemed appropriate based on the future outlook
and therefore all intangible assets are considered to have an
indefinite useful life.
13 Oil & Gas properties
2020 2019
GBP000 GBP000
Cost
At 1 January 2020 1,117 1,124
Transfers to held for sale (1,114) -
Foreign exchange (3) (7)
At 31 December 2020 - 1,117
Accumulated depreciation
At 1 January 2020 759 759
Transfers to held for sale (759) -
At 31 December 2020 - 759
Carrying value
At 31 December - 358
The Oil & Gas properties comprise the 8.29% participating interest
in the Kiliwani North Development Licence, in Tanzania.
Accumulated amortisation has been calculated on a units of production
basis. As there was no production during 2020, the amortisation
charge for the year is nil (2019: GBPnil).
All the date of authorisation of these financial statements the
Directors were actively seeking sale of all Tanzanian oil and
gas properties and the assets were reclassified as held for sale
at 31 December 2020 (note 16).
14 Investments
Quoted Equity Investments
GBP000
Cost
At 31 December 2019 and 2020 2,927
Impairment
At 31 December 2019 -
Charge in the period 1,385
At 31 December 2020 1,385
Net book value
At 31 December 2020 1,542
At 31 December 2019 2,927
The quoted investments in the current year relate to an equity
investment held in Helium One Ltd, a company incorporated in
the British Virgin Islands. Their subsidiaries hold helium mining
licences across Tanzania. The investment was unquoted in the
year to 31 December 2019 following which Helium One subsequently
listed on the London Stock Exchange on 4 December 2020 for 4.25p
per share and the shares held have been valued at the mark-to-market
value of 7.25p per share at 31 December 2020.
14 Investments
Unquoted Equity Investments
GBP000
Cost
At 31 December 2019 (as restated) and 2020 125
Impairment
At 31 December 2019 (as restated) and 2020 -
Net book value
At 31 December 2019 (as restated) and 2020 125
The unquoted investments in the current year relate to an equity
investment held in Corallian Energy Limited, a company incorporated
in England. The Company holds interests in oil and gas basins
in the United Kingdom.
Total investments at 31 December 2020 1,667
15 Subsidiary company
The only subsidiary of Scirocco Energy Plc is Scirocco Energy
International Limited a wholly-owned, UK incorporated micro-entity,
which is dormant, and has been since incorporation with an issued
share capital of GBP1. The registered office of the subsidiary
is 1 Park Row, Leeds, United Kingdom, LS1 5AB.
The Company has taken advantage of the exemption under the Companies
Act 2006 s405 not to consolidate this subsidiary as it has been
dormant from the date of incorporation and is not material for
the point of giving a true and fair view.
16 Assets and liabilities classified as held for
sale
2020 2019
GBP000 GBP000
Intangible assets 14,449 -
Oil and gas properties 354 -
Total assets classified as held for sale 14,803 -
Decommissioning provision 166 -
Total liabilities classified as held for sale 166 -
At the date of authorisation of the financial statements, the
Directors were actively seeking a sale of the above items within
the next 12 months (see note 10).
17 Trade and other receivables
2020 2019
GBP000 GBP000
Trade receivables 273 283
Provision for bad and doubtful debts (note 23) (55) (28)
218 255
Other receivables - 774
VAT recoverable 16 122
Loan to Helium One Ltd 73 76
Prepayments 114 210
421 1,437
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
On 1 March 2019 the Company subscribed to USD $1,000,000 convertible
loan notes from Helium One Limited for USD $100,000. In accordance
with the terms of the agreement, a redemption note can be issued
with five days notice. This currently has a carrying value of
GBP73,000 (2019: GBP76,000).
18 Trade and other payables
2020 2019
GBP000 GBP000
Trade payables 152 193
Accruals 57 167
Social security and other taxation 5 -
Other payables 34 5
248 365
The directors consider that the carrying amount of trade payables
approximates to their fair value.
19 Provisions for liabilities
2020 2019
GBP000 GBP000
PAYE Settlement - 184
Decommissioning Provision - 168
- 352
19 Provisions for liabilities
Analysis of provisions
Provisions are classified based on the amounts that are expected
to be settled within the next 12 months and after more than 12
months from the reporting date, as follows:
Current liabilities - 184
Non-current liabilities - 168
- 352
Movements on provisions: PAYE Settlement Decom Provision Total
GBP000 GBP000 GBP000
At 1 January 2020 184 168 352
Unwinding of discount - 3 3
Exchange difference - (5) (5)
Reclassification to liabilities
associated
with assets held for sale - (166) (166)
Release of share-settlement estimate (184) - (184)
At 31 December 2020 - - -
The PAYE settlement provision held at 31 December 2019 relates
to the amounts owed by Daniel Maling, former Managing Director,
for the PAYE on the share-settled transactions. This claim was
settled during the year to 31 December 2020 and the related provision
released.
The provision for decommissioning held at 31 December 2019 relates
to wells in Tanzania. The provision has been calculated assuming
industry established oilfield decommissioning techniques and
technology at current prices which are discounted at 5.89% per
annum. The wells in Tanzania relate to the Kiliwani North Development
Licence in Tanzania which has subsequently been classified as
held for sale and as such, the related decommissioning provision
has been reclassified.
20 Share capital
Number of shares Nominal value
GBP000
a) Called up, allotted, issued and fully paid: Ordinary shares of 0.2
p each
As at 31 December 2019 631,704,118 1,264
2 July 2020 - placing for cash at 0.02p 15,805,681 32
20 October 2020 - placing for cash at
0.02p 40,604,191 81
20 October 2020 - placing for cash at
0.02p 35,835,585 72
At 31 December 2020 723,949,575 1,448
20 Share capital
2020 2019
GBP000 GBP000
b) Deferred shares
Deferred shares of 265,324,634 at 0.69
pence each 1,831 1,831
c) Total Share options in issue
During the year no options were granted (2019: nil).
As at 31 December 2020, the unexercised options in issue were restated
as:
Exercise Price Amended Expiry Date Amended Original Options
(original) in Issue
31 December 2020
0.5p 10p 31 December 2020 10,200,000 204,000,000
0.5p 10p 31 December 2020 3,425,000 68,500,000
0.3p 6p 31 December 2020 5,000,000 100,000,000
0.35p 7p 31 October 2021 7,375,000 212,500,000
26,000,000 585,000,000
d) Total warrants in issue
No warrants lapsed in the year and no warrants were issued, cancelled
or exercised during the year (2019: nil).
As at 31 December 2020 there were nil outstanding (31 December 2019:
3,547,129 at 2.25p).
21 Share premium account
2020 2019
GBP000 GBP000
At beginning of year 37,316 37,316
Issue of new shares 1,083 -
At end of year 38,399 37,316
22 Share based payment
The Company has opted to remunerate the directors for the year
to 31 December 2020 by a grant of an option over the ordinary
shares of the capital of the Company as detailed in the deed of
option grants. The life of the options is 18 months, which was
1 January 2020. There are three executive directors and one non-executive
director who are members of the plan. The following table summarises
the expense recognised in the Statement of Comprehensive Income
since the options were granted.
2020 2019
GBP000 GBP000
Directors options 236 -
Incentive options 99 -
Credit to equity for equity-settled share-based
payments 335 -
During June 2020 (and the height of the Covid-19 pandemic) the
Company sought to put in place a strategy that would help to conserve
the Company's cash position in the near term and also to maximise
alignment between the Board, Management Team and Shareholders.
Accordingly, the Company proposed to grant nominal cost options
over new Ordinary Shares of 0.2p (GBP0.0020) to Directors and
select members of the Management Team ("the Director Options").
The Director Options were granted over a total of 8,990,039 Ordinary
Shares and have an aggregate value equal (on a net basis, after
deduction of the nominal exercise price per Ordinary Share) to
the fair value of salary and/or fees due to the relevant option
holders up to 31 May 2020.
Members of the Management Team were also awarded options over
Ordinary Shares with an exercise price of 1.3p (GBP0.013) ("the
Incentive Options"), which was approximately a 24% premium to
the closing midmarket price of the Company's Ordinary Shares on
26 June 2020. Each Incentive Option is ordinarily
exercisable on the 2nd anniversary of the grant date (being 30
June 2022), except in the event of specified corporate events
or, exceptionally, if the option holder leaves as a 'good leaver'.
The Company used the Black-Scholes model to determine the value
of the incentive options and the inputs. There were no share options
for the year ended 31 December 2019. The value of the options
and the inputs for the year ended 31 December 2020 were as follows:
Issue 30 June 2020
Incentive options
Share price at grant (pence) 1.09
Exercise price at grant (pence) 1.30
Expected volatility (%) 84.42
Expected life (years) 6
Risk free rate (%) 0.17
Expected dividends (pence) nil
Expected volatility was determined by using the Company's share
price for the preceding 3 years.
The total share-based payment expense in the year for the Company
was GBP99,207 in relation to the issue of incentive options (2019:
GBPnil) and GBPnil finance charges in relation to warrants (2019:
GBPnil).
22 Share based payment
The Incentive Options granted represent approximately 7.9% of
the Company's issued share capital (excluding warrants issued
to Prolific Basins LLC). The Board has retained additional headroom
for future Incentive Options as it recognises that the future
performance of the Company will be dependent on its ability to
retain the services of key executives.
23 Financial instruments
Categories of financial instruments
The following table combines information about:
* Classes of financial instruments based on their
nature and characteristics; and
* The carrying amounts of financial instruments.
2020 2019
GBP000 GBP000
Financial assets at amortised cost
Trade receivables 245 255
Other debtors - 774
Prepayments and accrued
income 114 210
Cash and cash equivalents 1,168 1,064
1,527 2,303
Book Value Fair Value Book Value Fair Value
2020 2020 2019 2019
Restated Restated
GBP000 GBP000 GBP000 GBP000
Financial assets at fair
value
Non-current Investment
- Helium One 1,542 1,542 2,927 2,927
Non-current Investment
- Corallian Energy Limited 125 125 125 125
Current Loans - Helium
One 73 73 76 76
1,740 1,740 3,128 3,128
2020 2018
GBP000 GBP000
Financial liabilities at amortised
cost
Trade payables 152 193
Accruals and deferred
income 57 167
209 360
23 Financial instruments
The table below analyses financial instruments carried at fair
value, by valuation method.
Fair values are categorised into different levels in a fair value
hierarchy based on the inputs used in the valuation techniques
as follows:
* Level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities.
* Level 2: inputs other than quoted prices included in
Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or
indirectly (i.e derived from prices).
* Level 3: inputs for the asset or liability that are
not based on observable market data (unobservable
inputs).
The fair values for the Company's assets and liabilities are not
materially different from their carrying values in the financial
statements.
The following table presents the Company's financial assets that
are measured at fair value:
Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
Non-current Investment
- Helium One 1,542 - - 1,542
Non-current Investment
- Corallian Energy Limited - - 125 125
Current Loans - Helium
One - - 73 73
Level 3 financial assets at 1 January 2020 2,927
Transfer of level 3 financial assets to Level 1 on admission
to London Stock Exchange (2,927)
Level 3 financial assets at 31 December 2020 -
Level 1 financial assets at 1 January 2020 -
Transfer of level 3 financial assets to Level 1 on admission
to London Stock Exchange 2,927
Impairment of Level 1 investments to mark-to-market value (1,385)
Level 1 financial assets at 31 December 2020 1,542
A transfer between levels of the fair value hierarchy is deemed
to occur when inputs for an asset or liability become observable
on market data. In the current year, Helium One was admitted to
the London Stock Exchange and inputs were subsequently observable
and therefore the asset was transferred to a Level 1 financial
asset (note 14).
The Company does not have any liabilities measured at fair value.
There have been no transfers in to or transfers out of fair value
hierarchy levels in the period.
23 Financial instruments
Financial instruments
in level 1
The fair value of financial instruments traded in active markets
is based on quoted market prices at the reporting date. A market
is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual
and regularly occurring market transactions on an arm's length
basis. The quoted market price used for financial assets held by
the Company is the current bid price.
Financial instruments in
level 2
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. These
valuation techniques maximise the use of observable market data
where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included
in level 2. No investments are valued using level 2 inputs in the
period.
Financial instruments
in level 3
If one or more of the significant inputs is not based on observable
market data, the instrument is included in Level 3. Following the
guidance of IFRS 9, these financial instruments have been assessed
to determine the fair value of the instrument. In their assessment,
the Directors have considered both external and internal indicators
to decide whether an impairment charge must be made or whether
there needs to be a fair value uplift on the instrument. Instruments
included in Level 3 comprise of convertible loan notes held with
Helium One. Details of this can be found at Note 17.
The carrying value of the Company's financial assets and liabilities
measured at amortised cost are approximately equal to their fair
value.
The Company is exposed through its operations to one or more of
the following financial risk:
* Fair value or cash flow interest rate risk
* Foreign currency risk
* Liquidity risk
* Credit risk
* Market risk
* Expected credit losses
Policy for managing these risks is set by the Board. The policy
for each of the above risks is described in more detail below.
Fair value and cashflow interest rate risk
Generally the Company has a policy of holding debt at a floating
rate. The directors will revisit the appropriateness of this policy
should the Company's operations change in size or nature. Operations
are not permitted to borrow long-term from external sources locally.
Foreign currency risk
Foreign exchange risk arises because the Company has operations
located in various parts of the world whose functional currency
is not the same as the functional currency in which the Company's
investments are operating. The Company's net assets are exposed
to currency risk giving rise to gains or losses on retranslation
into sterling. Only in exceptional circumstances will the Company
consider hedging its net investments in overseas operations as
generally it does not consider that the reduction in volatility
in net assets warrants the cash flow risk created from such hedging
techniques.
23 Financial instruments
The Company's exposure to foreign currency risk at the end of the
reporting period is summarised below. All amounts are presented
in GBP equivalent.
2020 2020 2019 2019
GBP000 GBP000 GBP000 GBP000
USD EUR USD EUR
Trade and other receivables 274 - 283 659
Cash and cash equivalents 1,006 - 94 -
Trade and other payables (142) - (41) -
Provisions - - (352) -
Net exposure 1,138 - (16) 659
Sensitivity analysis
As shown in the table above, the Company is primarily exposed to
changes in the GBP:USD exchange rate through its cash balance held
in USD and trading balances and to changes in the GBP:EUR exchange
rate due to the deposit denominated in EUR. The table below shows
the impact in GBP on pre-tax profit and loss of a 10% increase/decrease
in the GBP to USD exchange rate, holding all other variables constant.
Also shown is the impact of a 10% increase/decrease in the GBP
to EUR exchange rate, being the other primary currency exposure.
2020 2019
GBP000 GBP000
GBP:USD exchange rate increases 10% 126 11
GBP:USD exchange rate decreases 10% (154) (13)
GBP: EUR exchange rate increases 10% - 60
GBP: EUR exchange rate decreases 10% - (73)
Liquidity risk
The liquidity risk of each entity is managed centrally by the treasury
function. Each operation has a facility with treasury, the amount
of the facility being based on budgets. The budgets are set locally
and agreed by the board annually in advance, enabling the cash
requirements to be anticipated. Where facilities of entities need
to be increased, approval must be sought from the finance director.
Where the amount of the facility is above a certain level agreement
of the board is needed.
All surplus cash is held centrally to maximise the returns on deposits
through economies of scale. The type of cash instrument used and
its maturity date will depend on the forecast cash requirements.
23 Financial instruments
The table below analyses the company's financial liabilities into
relevant maturity groupings based on their contractual maturities.
The amounts presented are the undiscounted cash flows.
Less than 6 to 12 months Between 1 Between
6 months and 2 years 2 and 5
years
GBP000 GBP000 GBP000 GBP000
31 December 2020
Trade and other payables 243 - - -
Provisions - - - -
Total 243 - - -
31 December 2019
Trade and other payables 365 - - -
Provisions - 184 - -
Total 365 184 - -
Credit risk
The Company is mainly exposed to credit risk from credit sales.
It is Company policy, implemented locally, to access the credit
risk of new customers before entering contracts. Such credit ratings
are taken into account by local business practices.
The Company does not enter into complex derivatives to manage credit
risk, although in certain isolated cases may take steps to mitigate
such risks if it is sufficiently concentrated.
Market risk
As the Company is now investing in listed companies, the market
risk will be that of finding suitable investments for the Company
to invest in and the returns that those investments will return
given the markets that in which investments are made.
Expected credit losses
Allowances are recognised as required under the IFRS 9 impairment
model and continue to be carried until there are indicators that
there is no reasonable expectation of recovery.
For trade and other receivables which do not contain a significant
financing component, the Company applies the simplified approach.
This approach requires the allowance for expected credit losses
to be recognised at an amount equal to lifetime expected credit
losses. For other debt financial assets the Company applies the
general approach to providing for expected credit losses as prescribed
by IFRS 9, which permits for the recognition of an allowance for
the estimated expected loss resulting from default in the subsequent
12-month period. Exposure to credit loss is monitored on a continual
basis and, where material, the allowance for expected credit losses
is adjusted to reflect the risk of default during the lifetime
of the financial asset should a significant change in credit risk
be identified.
23 Financial instruments
The majority of the Company's financial assets are expected to
have a low risk of default. A review of the historical occurrence
of credit losses indicates that credit losses are insignificant
due to the size of the Company's clients and the nature of the
services provided. The outlook for the oil and gas industry is
not expected to result in a significant change in the Company's
exposure to credit losses. As lifetime expected credit losses are
not expected to be significant the Company has opted not to adopt
the practical expedient available under IFRS 9 to utilise a provision
matrix for the recognition of lifetime expected credit losses on
trade receivables. Allowances are calculated on a case-by-case
basis based on the credit risk applicable to individual counterparties.
Exposure to credit risk is continually monitored in order to identify
financial assets which experience a significant change in credit
risk. In assessing for significant changes in credit risk the Company
makes use of operational simplifications permitted by IFRS 9. The
Company considers a financial asset to have low credit risk if
the asset has a low risk of default; the counterparty has a strong
capacity to meet its contractual cash flow obligations in the near
term; and no adverse changes in economic or business conditions
have been identified which in the longer term may, but will not
necessarily, reduce the ability of the counterparty to fulfil its
contractual cash flow obligations. Where a financial asset becomes
more than 30 days past its due date additional procedures are performed
to determine the reasons for non-payment in order to identify if
a change in the exposure to credit risk has occurred.
Should a significant change in the exposure to credit risk be identified
the allowance for expected credit losses is increased to reflect
the risk of expected default in the lifetime of the financial asset.
The Company continually monitors for indications that a financial
asset has become credit impaired with an allowance for credit impairment
recognised when the loss is incurred. Where a financial asset becomes
more than 90 days past its due date additional procedures are performed
to determine the reasons for non-payment in order to identify if
the asset has become credit impaired.
The Company considers an asset to be credit impaired once there
is evidence that a loss has been incurred. In addition to recognising
an allowance for expected credit loss, the Company monitors for
the occurrence of events that have a detrimental impact on the
recoverability of financial assets. Evidence of credit impairment
includes, but is not limited to, indications of significant financial
difficulty of the counterparty, a breach of contract or failure
to adhere to payment terms, bankruptcy or financial reorganisation
of a counterparty or the disappearance of an active market for
the financial asset.
A financial asset is only written off when there is no reasonable
expectation of recovery.
A provision matrix can be used based on historical data of default
rates adjusted for a forward looking estimate. The history of default
rates needs to be accessed in conjunction with the aging of the
trade receivable balance. The aging of a balance alone does not
require a provision but can be used as a structure to apply the
rates calculated. The historical default rates are used in accordance
with forward looking information. From a commercial perspective
the TPDC has continued to delay settlement of the trade receivables
balance based on requests from the TPDC to Aminex for payments
of certain amounts which they wish to offset against the trade
receivables. Until this issue is resolved there will be no payment
of the invoices and as such an ECL is required to be recognised.
In order to determine the amount of ECL to be recognised in the
financial statements, Scirocco is using a provision matrix based
on its historical observed default rates which is adjusted for
forward-looking estimates and establishes that ECL should be calculated
as:
Non-past due 0.5% of carrying value
30 days past due 2% of carrying value
31-60 past due 4% of carrying value
61-90 past due 6% of carrying value
90 days-3 years past due 10% of carrying value
Over 3 years past due 20% of carrying value
23 Financial instruments
The simplified approach enables Scirocco to make an estimate of
ECL as they are unable to track the credit worthiness of customers.
The matrix above reflects the best estimate of the directors that
the claim by TPDC will be successful and is the lifetime credit
loss expected.
The total outstanding amount is GBP274k at 31 December 2020 which
is all over 3 years past due resulting in an ECL of GBP55k in the
current year.
24 Related party transactions
The Company had the following amounts outstanding from its investee
companies (Note 17) at 31 December:
2020 2019
GBP000 GBP000
Helium One opening balance 76 78
Foreign exchange movement (3) (2)
Balance at 31 December 73 76
There were no transactions between the parent and its dormant
subsidiary, which are related parties, during the year. Details
of director's remuneration, being key personnel, are given in
Note 7.
The Company entered into transactions with the following related
parties who have common directors during the current year:
2020 2019
GBP000 GBP000
NR Global Consulting Ltd - provision of management
services - common director Neil Ritson - (14)
Gneiss Energy Limited - provision of
corporate finance advisory - common
director Jonathan Fitzpatrick 225 538
Quixote Advisors Ltd - provision of
management services - common director
Tom Reynolds 27 53
25 Ultimate controlling party
In the opinion of the directors there is no controlling party.
26 Commitments
As at 31 December 2020, the Company had no material commitments
(2019: GBPnil).
27 Retirement benefit scheme
The Company operates only the basic pension plan required under
UK legislation, contributions thereto during the year amounted
to GBPnil (2019: GBPnil).
28 Cash generated from operations
2020 2019
GBP000 GBP000
Loss for the year after tax for continuing
operations (3,323) (2,621)
(Loss)/profit for the year after tax for
discontinuing
operations (795) 60
Adjustments for:
Finance costs 3 12
Loss on disposal of investments - 236
Impairment of investments 1,385 -
Loss on fair value revaluation of assets
held
for sale 810 -
Equity settled share based payment expense 335 -
Decrease in provisions (352) (3)
Movements in working capital:
Decrease in trade and other receivables 1,011 107
Increase/(decrease) in trade and
other
payables 49 (305)
Cash absorbed by operations (877) (2,514)
29 Post balance sheet event
Sale of Tanzanian Assets
The Board announced on the 2nd of March that the most appropriate
course of action regarding Tanzanian assets is to run a formal
process to explore value realisation options for the assets including,
but not limited to, the sale of Scirocco's interests in the certain,
or all, of its Tanzanian assets. In particular, the Board is confident
in the inherent value of its 25% interest in the Ruvuma asset
and will consider reasonable offers that reflect the quality of
the asset and its significant upside potential. A formal dataroom
has been established and the formal process was begun in March.
30 Prior period adjustment
Changes to the statement of financial position
At 31 December 2019
Previously Adjustment As restated
reported
GBP000 GBP000 GBP000
Fixed assets
Intangible assets 15,092 (125) 14,967
Investments 2,927 125 3,052
Net assets 18,724 - 18,724
Capital and reserves
Total equity 20,161 - 20,161
30 Prior period adjustment
Notes to reconciliation
There has been a restatement to the 2019 accounts. The investment
in Corallian Energy Limited was incorrectly classified as an
intangible asset and has subsequently been reclassified as an
unquoted equity investment.
This restatement has no overall impact on the equity as reported
at 31 December 2019.
COMPANY INFORMATION
Directors Alastair Ferguson (Chairman)
Tom Reynolds (CEO)
Jonathan Fitzpatrick
Donald Nicolson
Muir Miller (Joined February 2021)
Senior management Douglas Rycroft (COO)
Secretary John Alpine
Registered office 1 Park Row
Leeds
United Kingdom
LS1 5AB
Website www.sciroccoenergy.com
Nominated advisor Strand Hanson Ltd
26 Mount Row
Mayfair
London
W1K 3SQ
Auditor PKF Littlejohn LLP
15 Westferry Circus
London
United Kingdom
E14 4HD
Broker WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Solicitors Pinsent Masons LLP
141 Bothwell Street
Glasgow
G2 7EQ
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