WELCOME TO ADM ENERGY
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2020
ADM Energy is a natural resources investment company with an existing asset base in Nigeria. We hold a
9.2% profit interest in the Aje Field, part of OML 113.
We are seeking to build on our existing asset base and target other investment opportunities across the
West African region in the oil and gas sector. These will be based on attractive risk reward profiles such as
proven nature of reserves, level of historic investment, established infrastructure, route to early cash flow
and exploration upside.
CONTENTS
Company Information
2020 Overview
Chairman’s Report
Strategic Report
Board of Directors
Investment Approach
Directors' Report
Corporate Governance Report
Chairman’s Corporate Governance Statement
Report on Directors’ Remuneration
Report of the Independent Auditor
FINANCIAL STATEMENTS
Group Income Statement
Group and Company Statements of Financial Position
Company Statement of Changes in Equity
Group and Company Statements of Cash Flows
Notes to the Financial Statements
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Annual Report 2020
COMPANY INFORMATION
DIRECTORS
Oliver Andrews (Non-Executive Chairman)
Osamede Okhomina (Chief Executive Officer)
Richard Carter (Chief Operating Officer)
Manuel Lamboley (Non-Executive Director)
Lord Bellingham (Non-Executive Director)
Dr Stefan Liebing (Non-Executive Director)
REGISTERED OFFICE
60 Gracechurch Street
London, EC3V 0HR
COMPANY NUMBER
05311866
SECRETARY
NOMINATED ADVISER
LEAD BROKER
JOINT BROKER
REGISTRARS
SOLICITORS
INDEPENDENT AUDITOR
FINANCIAL PR
Shakespeare Martineau LLP
Cairn Financial Advisers LLP
Cheyne House
Crown Court
6263 Cheapside
London, EC2V 6AX
Arden Partners Plc
125 Old Broad Street
London EC2N 1AR
Hybridan LLP
2 Jardine House
The Harrovian Business Village
Beesborough Road, Harrow
Middlesex HA1 3EX
Computershare Investor Services Plc
The Pavilions
Bridgwater Road
Bristol, BS99 7NH
Locke Lord (UK LLP
Second Floor
201 Bishopsgate
London EC2M 3AB
Haysmacintyre LLP
Statutory Auditor
Chartered Accountants
10 Queen Street Place
London, EC4R 1AG
Luther Pendragon
48 Gracechurch Street
London, EC3V 0EJ
Annual Report 2020
3
2020 OVERVIEW
OML 113 Investment Highlights
‣ Delivered strategic agreement with EER Colobos) Nigeria Limited to increase ADM’s interest in the field –
revenue interest nearly doubled from 5% to 9.2% and ADM’s share of net 2P reserves increased from 8.9
MMboe to 16.4 MMboe
‣ Worked closely with operating partners to safely manage the impact of the pandemic and navigate the
temporary low oil price environment:
- Production from both the Aje-4 and Aje-5ST2 wells continued uninterrupted aside from planned
maintenance work, with oil stored on the FPSO while prices recovered
- Reduced operating costs at a project level by 42% on average, including a decrease in the
FPSO lease cost
- Breakeven cost of production reduced to US$28 per barrel, comfortably below the prevailing
crude oil price – ensuring Aje remained profitable at a project level
‣ Total oil production in 2020 of 698,649 bbls and barrels of oil per day of 1,909 bopd (99.2 bopd net to
ADM*). The drop in volume reflected the decision by the JV partners to carry out a more thorough and
extended period of maintenance on the FPSO while oil prices were depressed
‣ Post period, disposed of 188,778 shares in Superdielectrics Ltd for a total consideration of £849,501, a
profit of £656,003 on ADM’s original investment
* Includes increase in revenue interest from 5% to 9.2% after 9 December 2020
698 K+ bbls
Total oil production in 2020
16.4 MMboe
Net 2P Reserves
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Annual Report 2020
Financial and Corporate Highlights
‣ Revenue was £0.8m (2019 £2.5m) reflecting the decision not to participate in the 13th lifting in March
2020, a lower oil volume lifted from the FPSO as well as a lower realised oil price during the period
‣ Operating costs reduced by 42% to £1.4m (2019 £2.4m)
‣ Loss before and after tax was £6.9m (2019 £1.7m)
‣ Raised £0.85m for general working capital purposes and issued additional short-term debt of £0.3
million. Post
‣ period, in March 2021, the Group announced an equity fundraising of approximately £1,220,000.
‣ Signed an MOU with Trafigura Pte Ltd, the multi-billion-dollar global trading house, for a strategic alliance
to develop investment opportunities in the African energy sector
‣ Strengthened the Board and technical team with industry expertise and high-level contacts
- Appointed Sir Henry Bellingham, former UK Government Minister for Africa, and Dr Stefan
Liebing, Chairman of the German-African Business Association, as Non-executive Directors
- Post period, appointed Oliver Andrews, former Chief Investment Officer at the Africa Finance
Corporation, as Non-executive Chairman
- Added two oil and gas veterans, Darrell McKenna and Dr Satinder Purewal, to the technical
team, and post-period Dr Babatunde Pearse appointed Chief Engineer with responsibility to
oversee next phase of the Aje development
‣ Dual listed on the Berlin and Frankfurt stock exchanges to support growth and increase visibility to
investors in Germany, Europe’s largest retail investment market
£ 0.8 mln
Revenue in 2020
£1.2 mln
Equity Fundraising
Annual Report 2020
5
Chairman’s Report
Dear Stakeholders,
As the newly appointed chairman, I am pleased to
report in this, my first address, that ADM Energy
(“ADM”) has emerged from this global pandemic
with a solid foundation for future growth. The year
was inevitably influenced by COVID19 and the
impact of the pandemic was felt on individual lives
and businesses across the globe, but it was also a
year that demonstrated the remarkable resilience
shown by business, industry and national
economies to withstand the short-term impact and
identify new opportunities. With vaccination
programmes now well underway globally we are
seeing significant progress as restrictions are lifted
and business reverts to normality.
A Year of Challenges and
Opportunities
By taking advantage of an auspicious market, the
Company was able to acquire additional 2P reserves
at heavily discounted prices. The dramatic drop in
oil prices last year presented an opportunity to
acquire attractive assets at substantially depressed
valuations. Under the direction of our Chief
Executive Officer, Osa Okhomina, ADM completed
multiple assessments in 2020, increasing the
Company’s interest in the Aje Field. After dual-listing
ADM shares in Frankfurt and Berlin this year, we
have commenced trading and increased our
visibility to investors in Europe’s largest retail
investment market, Germany.
Following completion in December, the EER
Colobos) Nigeria Limited (“EER”) transaction
increased ADM's share in the Aje Field from 5% to
9.2% and we anticipate this to materially increase
attributable revenues from the asset in 2021. The
acquisition effectively doubles our interest in the 2P
reserve base from 8.9 MMboe to 16.4 MMboe and
positions ADM to benefit from a scale- up in
production, with field development plans being
progressed to access the prized liquid reserves.
Despite successfully completing these transactions,
we must recognise that 2020 was a challenging
year for the oil and gas sector as well as the wider
market. Accordingly, the Board took several
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Annual Report 2020
Chairman’s Report
measures to steer the business through the low oil
price environment, including cutting production
costs, storing oil on board the floating production
storage and offloading (“FPSO”) and deferring
participation in the 13th Lifting. On the corporate
side, the Company raised additional equity and debt
of £672,500 through a placing and subscription,
with five participating directors, and converted
£395,798 of debt to equity.
An impairment of £4.6 million was recognised (2019
nil) on our share of the Aje asset due to a change to
a 'fair value' implied by the purchase price
(excluding contingent portion) of the recently
announced Petronor/Panoro transaction.
Evolving the Board and Technical
Team
On behalf of the Board and all shareholders, I
commend my predecessor, Peter Francis, for his
tenure as chairman of ADM. He departs due to
personal circumstances with our very best wishes.
As the new chairman, I look forward to steering
ADM further towards its mandate and delivering to
favourable outcomes to our shareholders. I would
also like to thank Sergio Lopez for his service as he
too stepped down from the Board to pursue other
interests.
The change in personnel brought about in 2020 saw
ADM further enhance the vast expertise and
contacts of the Board to oversee the Company’s
ambitious growth strategy. Lord Henry Bellingham,
the former UK Government Minister for Africa, joined
as a Non- Executive Director along with Dr Stefan
Liebing, Chairman of the prestigious German-
African Business Association. Lionel Therond has
also joined the ranks as Chief Financial Officer (a
non-Board role).
In addition, we have bolstered our technical team to
advance our existing assets and evaluate new
prospects. We have enlisted non- Board advisers,
Darrell McKenna and Dr Satinder Purewal as Lead
Technical consultants and, most recently, Dr
Babatunde Pearse, as Chief Engineer. All three are
industry experts with extensive experience in the
world’s most prominent International Oil Companies
(“IOC”) and field development projects. Dr Pearse is
primarily responsible for planning the next phase of
the Aje development and oversees Front End
Engineering Design (“FEED”) studies to support the
Final Investment Decision.
Market Backdrop
ADM does not invest in high-risk exploration, but
has an investment strategy centred on producing
and near-term production assets intended to bridge
the energy transition and meet the ongoing demand
for oil and gas, particularly from developing
economies. There has been a sharp rebound in
energy demand and oil prices upon the re-opening
of the global economy. Meanwhile, oil majors are in
the process of realigning their strategies and
embarking on wide-scale divestment programmes
to meet carbon reduction targets. We are also open
to renewable energy investments, such as solar and
wind projects, following the Company’s successful
disposal of Superdielectrics post period for an ROI
of more than four times its original investment.
Delivering for our Shareholders
As newly appointed chairman since August 2021, I
am keen to oversee the Company’s strategy and
draw on my expertise in originating and evaluating
transactions, as well as financing and developing
projects across Africa. Over the last 35 years
(including my time as Chief Investment Officer at
Africa Finance Corporation, one of the largest
investment funds in Africa), I have overseen
investments of approximately US$10 billion and
originated investments deals in natural resources
and infrastructure across the continent, worth
US$100 billion.
Today, ADM is in a strong position to deliver value
for our shareholders, particularly by ramping up
production at Aje. In parallel, we continue to actively
Annual Report 2020
7
Chairman’s Report
assess other opportunities to accelerate our
growth by adding de-risked 2P reserves at
depressed valuations. By working closely with Osa
and the team, I am confident that we can deliver on
the Company's ambitious growth strategy. I thank
the management team for their dedication and
considerable efforts in this previous year.
Finally, I would like to extend my gratitude to our
shareholders for their continued support during this
truly extraordinary time. We look forward to
continued growth in 2021 and beyond.
OLIVER ANDREWS
NON-EXECUTIVE CHAIRMAN
30 September 2021
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Annual Report 2020
Chief Executive Officer’s Review
And Strategic Report
ADM successfully met the challenges of 2020, a
year in which we ensured our operations continued
in a safe and effective manner, while positioning the
business for growth. Our aim is to be a multi-asset
company with an interest in high-quality assets,
which offer the potential for material production
upside. We continued to execute on our strategy to
build the Company by acquiring undervalued 2P
reserves without the risks associated with high-cost
exploration. This included increasing our interest in
the Aje Field, a producing asset with substantial
potential in the near and medium term.
Through our technical expertise and access to
capital, we are in a strong position to significantly
de-risk the development of our assets, thereby
ensuring we unlock their underlying potential and
create value for our shareholders.
reserves. It is strategically located 24km offshore
Lagos where it benefits from increasing local energy
demand, particularly for gas, which is viewed as a
replacement fuel for diesel and commands a
premium. The field is also within close proximity to
the West African Gas Pipeline which presents a
potential opportunity for gas monetisation in
neighbouring countries such as Benin and Togo.
Completion of EER Transaction
ADM consolidated its interest in OML 113 during the
financial year and nearly doubled its reserves, net
revenue, and production share in the asset. The
Group increased its revenue interest from 5% to
9.2% by acquiring 25% of the interest, rights, and
obligations held by EER. This has increased ADM’s
share of net 2P reserves from 8.9 MMboe to 16.4
MMboe.
Aje Field
Operations
The Aje Field on OML 113 offshore Nigeria is an oil
producing asset which is rich in gas and condensate
ADM worked closely with the operating partners to
safely manage the impact of the pandemic and
Annual Report 2020
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Chief Executive Officer’s Review
And Strategic Report
ensure that, aside from planned maintenance work,
production continued uninterrupted at Aje.
Oil Production:
2020
2019
Gross
698,649 bbls
890,203 bbls
1,909 bopd
2,967 bopd
Net*
36,295 bbls
44,405 bbls
99.2 bopd
148bopd
* Includes increase in revenue interest from 5% to 9.2%
after 9 December 2020
Two liftings took place during 2020. Due to the
prevailing low oil price at the time, ADM elected to
not participate in the 13th lifting in March 2020, a
decision that has been vindicated by the recovery
of brent crude to US$70 per barrel. The Company
participated in the 14th lifting in October 2020,
which totalled 557,091 barrels with a net share of
33,056 barrels to ADM. Post period, the 15th lifting
was completed in April 2021 for a total of 225,000
barrels, equating to an increased net share to ADM
of 27,675 barrels post completion of the EER
transaction. The drop in volume reflected the
decision by the JV partners to carry out a more
thorough and extended period of maintenance on
the FPSO while oil prices were depressed.
The economic shutdowns imposed around the
world in response to COVID19 precipitated a
sudden drop in oil demand and severely impacted
crude prices. In light of the low oil price
environment, the partners successfully reduced
operating costs at project level by 42% on average,
including a decrease in the FPSO lease cost. As a
result, the breakeven cost of production was
reduced to US$28 per barrel, comfortably below the
prevailing crude oil price. This ensured that Aje
remained profitable at a project level, even despite
lower production volumes and crude oil prices. It
also provided a base for operational leverage as
prices increased during the year and post period,
with production stored on the FPSO, which has a
storage capacity of up to 755,808 barrels.
An impairment of £4.6 million was recognised (2019
nil) on our share of the Aje asset due to a change to
a 'fair value' implied by the purchase price
(excluding contingent portion) of the recently
announced Petronor/Panoro transaction, which as at
31 December 2020 was considered by the Directors
to represent the most relevant and reliable available
indicator of value against a backdrop of market and
operation uncertainty prevalent at the time.
The company has also recognised a Contingent
Liability as per note 22 on page 73, this is to reflect
an ongoing audit at project level on OML 113. We
expect the audit findings in the second half of 2021
which will give us clarity going forward on project
level debt.
Field Development Plan
The Partners are finalising discussions to reach a
Final Investment Decision on a new development
plan at Aje. This process will be supported by the
appointment of Dr Babatunde Pearse as our new
Chief Engineer. An industry veteran with an IOC
background, Dr Pearse has been appointed to plan
the next phase of the Aje development and oversee
FEED studies to support the Final Investment
Decision.
The development plan includes the drilling of three
new wells, which could potentially significantly
increase production of oil and gas liquids from 1,909
bopd in 2020 to up to 9,000 bopd (approximately
900 barrels per day net to ADM. It will also
monetise the Dry Gas rich Aje field, where it has
been estimated there is over 1.1 trillion cubic feet
(“Tcf") of Gas initially in Place ("GIIP"). This is able to
supply the Lagos market and can be sold to the
West Africa Gas Pipeline. The Partners continue to
explore various methods of financing, one of which
is the US$100 million pre-offtake conditional pre-
finance for approved projects that the Company
may access with Trafigura.
The development plan has been delayed as
PetroNor and Panoro Energy ASA agreed to a
further extension of the completion long stop date
from 30 June 2021, due to challenges related to
COVID19, for the previously announced purchase
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Annual Report 2020
Chief Executive Officer’s Review
And Strategic Report
of Panoro’s fully- owned subsidiaries that hold 100%
of the shares in Pan Petroleum Aje Limited.
opportunities elsewhere, the Bid Round is no longer
a strategic priority.
Financing and Pipeline
Outlook
Our existing asset base gives ADM exposure to
large-scale 2P reserves and a route to material
production upside. The Group remains confident of
the commercial viability of further development at
Aje and will continue to engage proactively with the
other partners to progress the Field Development
Plan. The FEED studies to be overseen by Dr
Pearse, our new Chief Engineer, will define the
project requirements for detailed engineering,
procurement, and construction of facilities to
support the Final Investment Decision.
These projects provide a strong base from which to
grow the business through additional acquisitions.
With many IOCs embarking on large-scale
divestment programmes, it remains a buyer’s market
and ADM is in a strong position to de-risk projects
through our technical expertise and access to
capital. In line with our investment strategy, we
continue to seek high-quality assets in West Africa
at depressed valuations with substantial upside for
our shareholders.
During the year, we signed an MoU with Trafigura
Pte Ltd, the multi-billion-dollar global trading house.
The intention is to create a strategic alliance where
ADM will act as the sponsor for investment
opportunities, with Trafigura providing up to US$100
million in approved project finance as well as up to
US$20 million of convertible loan notes. We have
engaged Trafigura on a number of potential deals to
date and maintain a strong relationship, extending
the agreement for a further 12 months post period.
Barracuda Field
Post period, we acquired a controlling interest in a
Risk Sharing Agreement (“RSA”) for the development
of the large-scale Barracuda Field. Located in OML
141, the Barracuda Field is an existing discovery and
near-term production asset, which covers 103 km2
in the swamp/shallow waters of the Niger Delta. The
Company announced in the period that it will
commission a Competent Person's Report (“CPR”)
on the Barracuda Field. ADM has received a draft of
a preliminary report however it is not yet finalised
pending further technical appraisal. Once finalised,
ADM will be in a better position to conclude the full
CPR report as well as its strategy for the Barracuda
field.
Nigerian Marginal Field Bid Round
In September 2020, ADM submitted a bid with the
Nigerian Department of Petroleum Resources
(“DPR”) for a marginal field in the 2020 Marginal
Field Bid Round ("Bid Round"). A total of 57 marginal
fields are available to participating companies
covering onshore, swamp and shallow offshore
fields. The process of awarding certain fields
commenced earlier this year and ADM remains in
discussion with multiple prospective partners. The
Company will assess all potential fields on their
individual merits, however, in light of attractive
Annual Report 2020
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Chief Executive Officer’s Review
And Strategic Report
Key Performance Indicators
(“KPIs”)
The Group’s activity is that of an investing group and
the Directors focus principally on the development
of the Group’s net asset value.
The key performance indicators are therefore set
out below:
GROUP STATISTICS
As at 31
December
2020
As at 31
December
2019
Net asset value
£11,002,000
£14,930,000
Net asset value – fully
diluted per share
Closing share price
8.5p
5.35p
20.7p
4.85p
Market capitalisation
£6,568,000
£2,886,000
Key Risks and Uncertainties
Early stage investments in the natural resources
sector carry a high level of risk and uncertainty,
although the rewards can be outstanding. At this
stage, there can be no certainty of outcome and, in
addition, there is often a lack of liquidity in the
Group’s investments which can be either unquoted
or quoted, such that the Group may have difficulty in
realising the full value in a forced sale. Accordingly, a
commitment is only made after thorough research
into both the management and the business of the
target, both of which are closely monitored
thereafter. Details of other financial risks and their
management are given in Note 20 to the financial
statements. The Group is currently funded through
debt and equity investment and therefore there is a
significant liquidity risk associated with lack of
funding. This is discussed further as part of the
going concern note in the relevant section of this
report.
Oil prices are subject to international supply and
demand and margins can be volatile. Political
developments, increased supply from new oil
sources, technological change, global economic
conditions and the influence of OPEC can impact
supply and demand and prices for our oil. Decreases
in oil prices could have an adverse effect on
revenue, margins, profitability and cash flows.
Exchange rate fluctuations can also create currency
exposures and impact underlying costs and
revenues.
We are pleased to report that operations at OML 113
have been largely uninterrupted by COVID19, which
is a consequence of the safety procedures in place
to protect workers. To steer ADM through the
current low oil price environment, we have taken
appropriate measures with a significant cost
reduction plan, both at a corporate level and on the
asset side, to streamline our operations while
maintaining production levels. This flexibility ensures
we remain profitable at an asset level and allows us
to benefit from a positive forward curve in the oil
price. As a result of these actions, ADM is now
better positioned to execute its growth investment
strategy, supported by a strong foundation of our
quality oil producing asset.
Promotion of the Company for the
benefit of the members as a whole
S172 of the Companies Act 2006 requires the Board
to promote the Company for the benefit of the
members as a whole. In particular, the requirements
of S172 are for the Directors to:
‣ Consider the likely consequences of any
decision in the long term
‣ Act fairly between the members of the
Company
‣ Maintain a reputation for high standards of
business conduct
‣ Consider the interests of the Company’s
employees
‣ Foster the Company’s relationships with
suppliers, customers and others and
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Annual Report 2020
Chief Executive Officer’s Review
And Strategic Report
‣ Consider the impact of the Company’s
operations on the community and the
environment.
The Directors believe that during the year they have
acted in the way most likely to promote the success
of the Company for the benefit of its members as a
whole and have adhered to the requirements set out
above that are applicable to the Company given its
scope of operations. Through its financing activities,
the Board has ensured that the Company is
sufficiently capitalised and has cash resources for
its requirements, to ensure that the Company has a
viable operating plan for the long term. Given the
nature of the Company’s business, it has very few
employees and the majority are themselves
directors. The Board recognises that the Company’s
employees are, nevertheless, critical to the success
of the Company and takes steps to ensure that the
interests of employees are protected. The Company
does not deal directly with customers or suppliers in
relation to its oil and gas field interests, save for its
relationship with the operator for the OML 113
licence. The Company acknowledges the
importance of maintaining good relations with its
suppliers and aims to settle all invoices in a timely
manner. The Company’s approach to its
responsibilities in respect of the impact of its
operations on the community and environment is
set out in “Our Sustainable Approach” on page 19.
Going Concern
At 31 December 2020, the Group recorded a loss for
the year of £6,904,000 and had net current liabilities
of £3,392,000, after allowing for cash balances of
£30,000.
Since the year end, the Group has raised additional
equity funding of £1,220,000 and realised £850,000
from the sale of investments to provide for working
capital requirements, and the Directors have
prepared cashflow forecasts for the period to 30
September 2022 to assess whether the use of the
going concern basis for the preparation of the
financial statements is appropriate. In the short
term, the Group will require further additional
funding in order to meet its liabilities as they fall due
and continue to operate as a going concern. The
Directors have taken into consideration the level and
timing of the Group’s working capital requirements
(which takes into account recent reductions in costs
and control of discretionary spending to preserve
cash flow) and has also considered the likelihood of
successfully securing funding to meet these needs.
In particular, consideration has been given to
ongoing discussions around further third-party
investment and the extent to which these
discussions are advanced both in respect of short
and longer term funding. The Directors
acknowledge that while they have an expectation
that funding will be secured based on this
assessment, at the date of approval of these
financial statements, no such funding has been
unconditionally committed. Therefore, while the
Directors have a reasonable expectation that the
Group has the ability to raise the additional finance
required in order to continue in operational
existence for the foreseeable future, the uncertainty
surrounding the ability and likely timing of securing
such finance indicates that a material uncertainty
exists that may cast significant doubt on the Group’s
ability to continue as a going concern. Were no such
funding to be secured, the Group would have no
realistic alternative but to halt operations and
prepare its financial statements on a non-going
concern basis.
On behalf of the Board,
OSAMEDE OKHOMINA
DIRECTOR
30 September 2021
Annual Report 2020
13
Chief Financial Officer’s Review
The financial results of the Group were negatively
impacted by lower oil prices due to the Covid crisis
and lower lifting volume due to maintenance
activities on the FPSO. Despite these challenges,
lower operating costs somewhat mitigated the
impact whilst continued assessment of mergers and
acquisitions opportunities provide a solid foundation
to build from in the future. We also recognised an
impairment on the carrying value of our Aje asset.
Revenue and profit
For the year ended 31 December 2020, the Group’s
revenue decreased by 68% to £0.8 million (2019
£2.5 million). The lower revenue reflects a lower oil
volume lifted from the FPSO as well as a lower
realised oil price during the period.
Operating costs decreased by 42% to £1.4 million
(2019 £2.4 million) as cost-cutting initiatives were
taken by the Aje partnership to mitigate the impact
of low oil prices.
However, administrative expenses increased by 52%
to £2.6 million (2019 £1.7 million) as M&A evaluation
activity increased substantially.
An impairment of £4.6 million was recognised (2019
nil) on our share of the Aje asset due to a change to
a 'fair value' implied by the purchase price
(excluding contingent portion) of the recently
announced PetroNor E&P Ltd/Panoro Energy ASA
(“Petronor/Panoro”)transaction, which as at 31
December 2020 was considered by the Directors to
represent the most relevant and reliable available
indicator of value against a backdrop of market and
operation uncertainty prevalent as at 31 December
2020.
An unrealised gain of £0.7 million was recognised
(2019 nil) to reflect a 339% appreciation of the
Group's minority stake in Superdielectrics implied by
their October 2020 equity raise since the purchase
of our stake in 20172018. This gain was realised
post period end.
As a result, the loss after taxation increased to £6.9
million (2019 £1.7 million loss). The Directors do not
propose a dividend (2019 £nil).
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Annual Report 2020
Chief Financial Officer’s Review
Cash flows and liquidity
After adjusting for the conversion of warrants issued
in settlement of fees and working capital
movements, cash outflow from operating activities
decreased to £0.95 million (2019 £1.5 million
outflow).
During the period, the Group raised additional equity
of £0.85 million for general working capital
purposes, and issued additional short-term debt of
£0.3 million.
As of 31 December 2020, the Group had cash and
cash equivalents of £30,000 31 December 2019
£15,000.
Post period, in March 2021, the Group announced
an equity fundraising of approximately £1,220,000.
Outlook
Following the successful acquisition of an additional
interest in the Aje field from EER and of an indirect
controlling interest in a risk-sharing contract for the
development of the Barracuda discovery, the Group
remains committed to pursuing other value-
accretive acquisitions focused on producing and
near-term production assets.
In doing so, the Group will play to its strength by
relying on our robust and highly experienced
technical team, a deep-rooted presence in Nigeria
and across Africa, and the unyielding support of our
solid and committed funding partners.
To this end, the Directors continue to review and
assess acquisition opportunities and they are
confident in the future expansion and enhancement
of the Group's portfolio for the benefit of all
shareholders. Despite the continued derating of the
oil sector in the equity market, this strategy has the
potential to deliver substantial value through cash
flow distribution to shareholders.
LIONEL THEROND
CFO
30 September 2021
Annual Report 2020
15
Board OF Directors
BOARD OF DIRECTORS
OLIVER ANDREWS
Non-Executive Chairman
Oliver has over 35 years’ experience in infrastructure development, investing,
public-private partnerships and strategic advisory work such as advising and
partnering with governments, regional and international corporations and
development finance institutions. During his career, he has overseen the
investment of approximately US$10bn and originated US$100bn of
investments in natural resources and infrastructure deals across the African
continent on behalf of investee institutions. Oliver was formerly Executive
Director and Chief Investment Officer at the Africa Finance Corporation, one of the biggest investors in
natural resources and infrastructure solutions in Africa, where he oversaw the growth of assets under
management from US$1bn to over US$8.4bn including significant investments in the oil and gas sector.
OSAMEDE OKHOMINA
Chief Executive Officer
A Cambridge Philosophy graduate turned oil man, Osamede was appointed
CEO of ADM Energy in July 2019. He has more than 20 years’ experience in
the global oil and gas industry, particularly in Africa, financing projects and
growing businesses. Osamede started his career at Terra Energy Services,
helping to introduce new deep-water technologies in Nigeria. He is a founding
partner of Africa-focused Energy Equity Resources, a partner investor of ADM
Energy, where he has secured more than $300 million of direct foreign
investment into Nigerian oil and gas. He brings considerable government expertise and connections to the
ADM Energy board.
RICHARD CARTER
Chief Operating Officer
Richard is a qualified accountant with extensive experience of raising funds for
public and private companies. He has worked and advised across media,
telecoms, engineering and energy sectors in various corporate finance and
investor relations roles. As Chief Operating Officer, Richard supports the CEO
and management team with its regulatory functions.
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Annual Report 2020
Board OF Directors
MANUEL LAMBOLEY
Independent Non-Executive Director
Manuel is a financier with over 30 years’ experience in international broking
and investment banking. He previously served as Head of the Geneva office of
Williams de Broe and has held senior positions at Bank Julius Bar, Kidder
Peabody, Paine Webber International and Prudential-Bache Securities. Manuel
has long- standing relationships with major investors and financial advisers
worldwide, with a particular focus on the natural resources sector. He is a non-
executive director of Alba Minerals plc and has been a non- executive director
of several other listed companies in the mining and energy sectors, including International Mining &
Infrastructure Corporation plc, and was also previously an independent director of UK-based African Aura
Resources Limited.
DR STEFAN LIEBING
Independent Non-Executive Director
Dr Stefan Liebing is the Chairman of Afrika-Verein der deutschen Wirtschaft
e.V., the prestigious German- African Business Association, where as part of
his role, he advises the German Government on investment in Africa. He
chaired the G20 Compact with Africa investment summits in 2018 and 2019,
held under the patronage of Chancellor Angela Merkel. Dr Liebing is the CEO
of Conjuncta GmbH, a boutique investment and project development
company. Previously, Dr Liebing was a Director of International Gas Business at
EnBW Energie Baden-Wuerttemberg AG, one of the largest energy supply companies in Europe. Previously
he held various senior positions at Royal Dutch Shell.
LORD BELLINGHAM
Independent Non-Executive Director
Lord Bellingham has enjoyed a distinguished Parliamentary career of almost
40 years and held a number of senior positions including: Foreign Office
Minister for Africa, The UN, Caribbean, Overseas Territories and Conflict
Issues; Chairman of the Westminster Foundation for Democracy; Chairman of
the All-Party Group on the Commonwealth; and the Prime Minister`s Trade
Envoy to Libya. In 2016, he was Knighted in the New Year Honours list for
Parliamentary and Political Service. He sits in the House of Lords after being
awarded a Life Peerage in 2020.In addition to his Parliamentary career, Lord Bellingham has held several
non-executive roles on AIM companies and, until recently, was Non-executive Chairman of Pathfinder
Minerals plc since 2014. Prior to entering Parliament, Lord Bellingham practised as a barrister having
graduated from Magdalene College, Cambridge with a master’s degree in Law.
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17
Investment Approach
INVESTMENT APPROACH
Investment Policy
The Company will seek to invest in opportunities
within the natural resources sector, the oil services,
power and energy sectors and in technology
opportunities related to these sectors that the
Directors believe either are of strategic value or
represent a significant value opportunity. The
Company is prepared to take an active role in its
investments where it is deemed to be appropriate.
The Directors plan to adopt a flexible approach,
both as to the form of the Company’s investments
and the subject of its investments. The investments
may be in quoted and unquoted companies. This
includes making investments in other quoted
investment companies focused on the natural
resources, power and energy sectors or related
technologies, including those with no significant
assets other than cash. The Directors believe that
investing in these other investing companies will
provide the Company with greater scope to make
and support its investment strategy.
The Company’s investments may take the form of
equity, debt, convertible instruments, options and
licence rights. Possible investments could include
direct or indirect investments in permits and
licences, exploration, mining and production
operations and processing and development
projects.
The Company may make direct investments in
private or quoted companies and indirect
investments via quoted companies, unquoted
companies seeking a public quotation and
candidates for reverse transactions into quoted
investment companies. The Company may invest in
these types of opportunities through acquisitions,
partnerships, joint venture arrangements, as
finance for management buy-outs or buy-ins, as
finance for pre-IPO, seed and underwriting
positions.
Such investments may result in the Company
acquiring the whole or part of a company or
project. The Company will consider opportunities
anywhere in the world.
The Company expects to be an active investor in
situations where the Company can make a clear
contribution to the progress and development of
the investment. In respect of other, principally more
substantial opportunities, the Company expects to
be a passive investor.
The Company intends to invest for the medium to
long-term. However, should an opportunity arise to
realise its investments, the Company will consider
these on a case-by-case basis and seek to
maximise value for shareholders. The Directors
intend to hold all investments for a minimum of 30
days. Other than set out above, there are no
restrictions on the Company’s investment policy.
The Company intends to utilise industry experts in
the analysis of proposed investments, and it is
intended that the decision-making process will be a
collegiate, team-based approach, driven by
intrinsic value or informed opinion.
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Annual Report 2020
Investment Approach
Our Sustainable Approach
ADM Energy is committed to the highest standards of corporate social responsibility in its investing
policy. Working alongside its partners, the Company strives to ensure the safety of all staff and
contractors, while minimising environmental impact, for the benefit of the communities in which it works
and all its stakeholders.
ADM conducts its investment operations in a responsible and transparent manner. Being socially responsible
is a key component in the Company’s business and its achievements. This includes not only adherence to
Government legislation and Company policies, but must extend to acceptance that ADM is, in all the projects
in which it holds an investment, a neighbour in established communities and environments.
The Company is conscious of the impact to the environment and local communities that oil and gas activities
may have and aims to minimise and constantly reduce these effects. The projects in which ADM invests
comply with all existing laws, regulations and permits. By making continuous improvements, the Company’s
ambition is to set a good example in the markets where it is active. ADM’s focus in its projects is
environmental protection, pollution prevention and human health. The Company’s actions are characterised
by respect for the cultures of the regions in which it operates. ADM is committed to maintaining an open
dialogue over the environmental aspects of its investments and the operations of the partners in these
projects with all stakeholders.
Annual Report 2020
19
Directors’ Report
share warrants are included in the Report on
Directors’ Remuneration.
Name of director
Peter Francis
Ordinary
shares of
1p each
Number
1,946,212
Osamede Okhomina
1,015,909
Richard Carter
Dr Stefan Liebing
Lord Bellingham
627,575
136,364
186,364
Percentage
of capital
%
1.59%
0.83%
0.51%
0.11%
0.15%
As referred to in Post year-end events, subsequent
to the year-end Peter Francis, Osamede Okhomina,
Richard Carter and Dr Stefan Liebing participated in
a fund raising on 24 March 2021, and on 4 May
2021 Osamede Okhomina acquired a further
480,446 shares. The resulting shareholdings of the
directors at the date of this report are:
Name of director
Peter Francis
Ordinary
shares of
1p each
Number
3,122,683
Osamede Okhomina
2,676,826
Richard Carter
Dr Stefan Liebing
Lord Bellingham
1,098,163
489,305
186,364
Percentage
of capital
%
1.98%
1.70%
0.70%
0.31%
0.12%
SUBSTANTIAL SHAREHOLDINGS
The only interests in excess of 3% of the issued
share capital of the Company which have been
notified to the Company as at 27 September 2021
were as follows:
DIRECTORS’S
REPORT
The Directors present their annual report on the
affairs of the Group, together with the financial
statements for the year ended 31 December 2020.
Certain information required by the Companies Act
2006 relating to the information to be provided in
the Directors’ Report is set out in the Strategic
Report and includes principal activity, future
developments and principal risks and uncertainties.
DIRECTORS
The Board comprised the following directors who
served throughout the year and up to the date of
this report unless otherwise stated.
Oliver Andrews
Appointed 2 August 2021
Osamede Okhomina
Richard Carter
Manuel Lamboley
Lord Bellingham
Appointed 29 July 2020
Dr Stefan Liebing
Appointed 22 July 2020
Peter Francis
Sergio Lopez
Resigned 2 August 2021
Resigned 22 July 2020
DIRECTORS’ INTERESTS
Set out below are the Directors’ beneficial holdings
of ordinary shares in the Company as at 31
December 2020. Their interests in the Company’s
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Annual Report 2020
Directors’ Report
Name of
shareholder
Hessia Group
Limited
Align Research
Limited & related
parties – RS & CA
Jennings
Euro Americas
Securities Limited
Calabar Capital
Limited
Ordinary
shares of
1p each
Number
Percentage
of capital
%
28,982,636
18.39%
11,813,122
7.50%
6,000,000
3.81%
5,657,912
3.89%
POST YEAR END EVENTS
On 29 January 2021, the company announced that
it had extended its strategic alliance with Trafigura
Pte Ltd for conditional financing of up to $120
million by twelve months.
On 24 March 2021, the Company announced that it
had raised approximately £1,220,000 of equity
issuing 28,710,250 ordinary shares at a price of
4.25 pence per share.
On 8 April 2021, the Company announced that it
had issued 443,627 ordinary shares to a participant
of the £200,000 loan facility announced on 27 April
2020 and the £200,000 loan facility announced on
25 August 2020 to settle the £15,000 interest
accrued on the loans. 208,333 ordinary shares
were issued at a price of 2.4 pence per share and
235,294 ordinary shares were issued at a price of
4.25 pence per share.
On 28 April 2021, the Company announce the
completion of the Barracuda Field transaction
acquiring a 51% interest in KONH UK Ltd which
holds a 70% interest in the rights, benefits and
obligations under the risk sharing agreement for
the development of the large-scale Barracuda Field
in OML 141. As part of the consideration 5,657,912
ordinary shares were issued at a price of 7 pence
per share.
On 4th May 2021, the Company announced that
CEO Osa Okhomina purchased 480,446 ordinary
shares at 3.45 pence per share.
On 20 May 2021, the company announced the
disposal of its interest in Superdielectrics Ltd selling
188,778 shares at a price of £4.50 per share.
On 22 June 2021, the Company announced that it
had extended 2 loan agreements. £100,000 had
been extended to 31 December 2021, and
£100,000 had been extended to 30 June 2022.
4,705,882 new warrants were issued in respect of
the loan extension.
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The Directors are responsible for preparing the
report of the directors and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare
Group and Company financial statements for each
financial year. The Directors are required by the AIM
Rules of the London Stock Exchange to prepare
group financial statements in accordance with
International Financial Reporting Standards (“IFRS”)
as adopted by the European Union (“EU”) and have
also elected to prepare the Company financial
statements in accordance with IFRS as adopted by
the EU. 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 and profit or loss of the company
and group 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;
Annual Report 2020
21
Directors’ Report
‣ state whether applicable IFRSs have been
followed, subject to any material departures
disclosed and explained in the financial
statements; and
‣ prepare the financial statements on the
going concern basis unless it is inappropriate
to presume that the Group will continue in
business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Group and enable them to ensure
that the financial statements comply with the
Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
CORPORATE GOVERNANCE
Corporate governance regulations apply to all AIM
quoted companies and require the Company to:
‣ provide details of a recognised corporate
governance code that the board of directors
has decided to apply; and
‣ explain how the Company complies with that
code, and where it departs from its chosen
corporate governance code provide an
explanation of the reasons for doing so.
The Directors recognise the importance of sound
corporate governance while taking into account the
Group’s size and stage of development and the
following two sections explain the Company’s
compliance with these regulations.
In the case of each person who was a director at
the time, this report was approved:
AUDITORS
‣ so far as that director is aware there is no
relevant audit information of which the
Group’s auditor is unaware; and
‣ that director has taken all steps that the
director ought to have taken as a director to
make himself aware of any relevant audit
information and to establish that the Group’s
auditor is aware of that information.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Group’s website.
Legislation in the United Kingdom governing the
preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
A resolution to re-appoint Haysmacintyre LLP as
auditors will be put to the AGM.
On behalf of the Board,
OSAMEDE OKHOMINA
DIRECTOR
30 September 2021
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Annual Report 2020
Corporate Governance Report
CORPORATE GOVERNANCE REPORT
INTRODUCTION
All members of the Board believe strongly in the value and importance of good corporate governance and in
accountability to all of ADM Energy’s stakeholders. The statement below, explains the approach to
governance, and how the Board and its Committees operate.
The corporate governance framework which the Company operates, including board leadership and
effectiveness, board remuneration, and internal control is based upon practices which the Board believes are
proportional to the size, risks, complexity and operations of the business and is reflective of the Group’s
values. Of the two widely recognised formal codes, we have therefore decided to adhere to the Quoted
Companies Alliance’s (QCA Corporate Governance Code for small and mid-size quoted companies (revised
in April 2018 to meet the new requirements of AIM Rule 26.
The QCA Code is constructed around ten 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 about 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 taken in relation to each.
The following paragraphs set out the Company’s compliance with the ten principles of the QCA Code.
•
Establish a strategy and business model which promotes long-term value for
shareholders
The Company is an investing company quoted on AIM. Its principal focus is investing in the natural resources
sector, particularly in oil and gas where it believes that it can make an attractive return for shareholders. The
Company expects to generate returns for shareholders through the development of its investments.
Currently, the Company’s principal investment is in the Nigerian offshore licence OML 113 and to date the
Company has been involved with maintaining and progressing its investment in OML 113 together with the
joint operators from the development stage through to production. It is therefore expected that a return to
shareholders will be delivered principally through capital growth.
The Board recognises that a challenge of the natural resource sector is the significant time and financial
investment often required to commercialise a resource or reserve. In respect of OML 113, the Company is a
small but important stakeholder and therefore a key challenge is to continually appraise the OML 113
opportunity from a financial and technical standpoint and to ensure that all further investment in this asset
delivers realistic value opportunities for all shareholders.
•
Seek to understand and meet shareholder needs and expectations
The Board is committed to maintaining good communication and having constructive dialogue with its
shareholders. Shareholders
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23
Corporate Governance Report
have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all
shareholders are encouraged to attend the Company’s Annual General Meeting (“AGM”). Investors also have
access to current information on the Company through its website, www.admenergyplc.com and via
Osamede Okhomina, CEO who is available to answer investor relations enquiries and can be contacted on
osamede@admenergyplc.com or hello@admenergyplc.com.
•
Take into account wider stakeholder and social responsibilities and their
implications for long-term success
The Board recognises that the long-term success of the Company is reliant upon the efforts of its directors
and employees, the efforts and activities of the joint operation partners and upon their contractors, suppliers
and regulators. The Board has put in place a range of processes and systems to ensure that there is close
Board oversight and contact with its key resources and relationships.
As an investing company, the Company recognises that it is likely further investment will be required as it
develops the OML 113 asset and its portfolio of other investments. Accordingly, ensuring that the Company
continually understands the requirements of shareholders in the context of the broader developments in its
sector of operation is extremely important.
The Company’s CEO is in regular dialogue with a number of the Company’s shareholders, and feedback from
this contact is used to shape subsequent communication with shareholders as a whole and the market more
generally.
•
Embed effective risk management, considering both opportunities and threats,
throughout the organisation
In addition to its other roles and responsibilities, the Audit and Compliance Committee (see composition
details in Corporate Governance section of website, www.admenergyplc.com,) is responsible to the Board
for ensuring that procedures are in place, and are being effectively implemented to identify, evaluate and
manage the significant risks faced by the Company. Within the scope of the annual audit, specific financial
risks are evaluated in detail, including in relation to foreign currency, interest rates, liquidity and credit.
In terms of investment appraisal, this process is usually led by the CEO and COO. The opportunities are then
presented and discussed by the Board as a whole. Where necessary, the Company will also involve third
party experts in the overall appraisal process.
The Directors have established procedures, as represented by this statement, for the purpose of providing a
system of internal control. In addition, there are a range of Company policies that are reviewed at least
annually by the Board. These policies cover matters such as share dealing and insider legislation. The Board
currently takes the view that an internal audit function is not considered necessary or practical due to the
size of the Company and the close day to day control exercised by the Directors. However, the Board will
continue to monitor the need for an internal audit function.
The annual review of internal control and financial reporting procedures did not highlight any issues
warranting the introduction of an internal audit function. It was concluded, given the current size and
transparency of the operations of the Company, that an internal audit function was not required. As noted in
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Annual Report 2020
Corporate Governance Report
the Strategic Report on pages 913, the Board regularly reviews operating and strategic risks and considers
in such reviews financial and non-financial information including:
‣ a review of the business at each Board meeting, focusing on any new decisions/risks arising;
‣ the performance of investments;
‣ selection criteria of new investments; and
‣ reports prepared by third parties.
• Maintain the Board as a well-functioning, balanced team led by the Chair
The QCA Code requires that the boards of AIM companies have an appropriate balance between executive
and non-executive directors of which at least two should be independent.
The Board comprises Non-Executive Chairman Oliver Andrews, CEO Osamede Okhomina, COO Richard
Carter, and Non-Executive Directors Lord Henry Bellingham, Dr Stefan Liebing and Manuel Lamboley. The
time commitment formally required by the Company is an overriding principal that each director will devote
as much time as is required to carry out the roles and responsibilities that the director has agreed to take on.
Biographical details of the current directors are set out within Principle Six below and on pages 1617.
Executive and non-executive directors are subject to re-election intervals as prescribed in the Company’s
Articles of Association. At each Annual General Meeting, one-third of the Directors, who are subject to
retirement by rotation shall retire from office. They can then offer themselves for re-election. The letters of
appointment of all directors are available for inspection at the Company’s registered office during normal
business hours.
The Directors’ receive fees for their services as directors which are approved by the Board, being mindful of
the time commitment and responsibilities of their roles and of current market rates for comparable
organisations and appointments.
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 Board meets as regularly as necessary. It has established an Audit and Compliance Committee and a
Remuneration Committee, particulars of which appear hereafter. Appointments to the Board are made by the
Board as a whole and so the Company has not created a Nominations Committee.
The Board retains full control of the Company with day-to-day operational control delegated to the CEO and
other Directors.
•
Ensure that between them the Directors have the necessary up-to-date
experience, skills and capabilities
All members of the Board bring either relevant sector experience or public market’s experience which the
Company considers to be fundamentally important in its chosen area of operation and investment appraisal
Annual Report 2020
25
Corporate Governance Report
process. The Board believes that its blend of relevant experience, skills and personal qualities and
capabilities is sufficient to enable it to successfully execute its strategy. Please see biographies of the Board
of Directors on pages 1617.
•
Evaluate board performance based on clear and relevant objectives, seeking
continuous improvement
Internal evaluation of the Board, its Committees and individual directors is important and will develop as the
Company grows in the future. The expectation is that Board reviews will be undertaken on an annual basis to
determine the effectiveness and performance in various areas as well as the directors’ continued
independence.
•
Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the
Company as a whole and that this will impact the performance of the Company. The Board is very aware
that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole.
Therefore, the importance of sound ethical values and behaviour is crucial to the ability of the Company to
successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate
life and seeks to ensure that this flows through all that the Company does. The Board assessment of the
culture within the Company at the present time is one where there is respect for all individuals, open
dialogue within the Company and a commitment to best practice.
The Company has also adopted an anti-bribery policy which is clearly set out on the Company’s website.
•
Maintain governance structures and processes that are fit for purpose and support
good decision-making by the Board
The Board schedule provides for six board meetings per annum and, in addition, meets ad-hoc as required.
Notwithstanding the above, the Board and its Committees receive appropriate and timely information prior to
each meeting; a formal agenda is produced for each meeting, and Board and Committee papers are
distributed several days before meetings take place. Any Director may challenge Company proposals and
decisions are taken democratically after discussion. Any Director who feels that any concern remains
unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are
then circulated to all Directors. Any specific actions arising from such meetings are agreed by the Board or
relevant Committee and then followed up by the Company’s management.
The Audit and Compliance Committee monitors the integrity of financial statements, oversees risk
management and control, and reviews external auditor independence. It also ensures that the Company is
compliant with its relevant regulatory requirements.
The Non-Executive Chairman has overall responsibility for corporate governance and in promoting high
standards throughout the group. He leads and chairs the Board, ensuring that committees are properly
structured and operate with appropriate terms of reference, ensures that performance of individual directors,
the board and its committees are reviewed on a regular basis, leads in the development of strategy and
setting objectives, and oversees communication between the group and its shareholders.
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Annual Report 2020
Corporate Governance Report
The Executive Directors are responsible for implementing and delivering the strategy and operational
decisions agreed by the board, making operational and financial decisions required in the day-to-day
operation of the group, providing executive leadership to managers, championing the group’s core values
and promoting talent management.
The Non-Executive Directors contribute independent thinking and judgement through the application of
their external experience and knowledge, scrutinise the performance of management, provide constructive
challenge to the executive directors and ensure that the group is operating within the governance and risk
framework approved by the Board.
The Board has approved the adoption of the QCA Code as its governance framework against which this
statement has been prepared and will monitor the suitability of this code on an annual basis and revise its
governance framework as appropriate as the group evolves.
•
Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
The Company communicates with shareholders through its period announcement, the Annual Report and
Accounts, full-year and half-year announcements, the AGM and one-to-one meetings with large existing or
potential new shareholders. A range of corporate information (including all Company announcements and
presentations) is also available to shareholders, investors and the public on the Company’s corporate
website, www.admenergyplc.com.
Annual Report 2020
27
Chairman’s Corporate Governance Statement
CHAIRMAN’S CORPORATE GOVERNANCE
STATEMENT
The Board is committed, where practicable, to
developing and applying high standards of
corporate governance appropriate to the Company’s
size and stage of development. The Board seeks to
apply where appropriate the QCA Code as devised
by the Quoted Companies Alliance.
The QCA Code is constructed around ten broad
principles and a set of disclosures. The Code states
what is considered to be appropriate arrangements
for growing companies and asks companies to
provide an explanation about how they are meeting
the principles through the prescribed disclosures.
BOARD STRUCTURE
The Board has six directors, four of whom are non-
executive. The Board is responsible for the
management of the business of the Company,
setting its strategic direction and establishing
appropriate policies. It is the Directors’ responsibility
to oversee the financial position of the Company
and monitor its business and affairs, on behalf of the
shareholders, to whom they are accountable. The
primary duty of the Board is to act in the best
interests of the Company at all times. The Board
also addresses issues relating to internal controls
and risk management. The non-executive directors
bring a wide range of skills and experience to the
Company, as well as independent judgment on
strategy, risk and performance. The independence
of each non-executive director is assessed at least
annually, and all of the non-executive directors are
considered to be independent at the date of this
report.
The roles of the Chairman and CEO are separate,
with their roles and responsibilities clearly divided
and recorded. A summary of their roles is as follows:
The Chairman is responsible for leadership of the
Board, ensuring its effectiveness and setting its
agenda. The Chairman facilitates the effective
contribution and performance of all Board members
whilst identifying any development needs of the
Board. He also ensures that there is sufficient and
effective communication with shareholders to
understand their issues and concerns.
The CEO is responsible for executing the strategy
agreed by the Board and developing the Group
objectives through leadership of the senior
executive team. He will recommend to the Board
any investment or new business opportunities which
meet this strategy. He also ensures that the Group’s
risks are adequately addressed and appropriate
internal controls are in place. The CEO is responsible
for meeting with shareholders and ensuring
effective communication.
ATTENDANCE AT MEETINGS
It is expected that all Directors attend Board and
relevant Committee meetings, unless they are
prevented from doing so by prior commitments, and
that all Directors will attend the AGM.
During the year the Board met 8 times and all the
Directors attended the meetings.
BOARD COMMITTEES
Remuneration Committee
The Remuneration Committee consists of Oliver
Andrews (Committee Chairman) and Manuel
Lamboley. It is responsible for reviewing the
performance of the senior executives and for
28
Annual Report 2020
Chairman’s Corporate Governance Statement
determining their levels of remuneration. The
Committee makes recommendations to the Board,
within agreed terms of reference regarding the
levels of remuneration and benefits.
Remuneration Committee Report
On behalf of the Board, I am pleased to present the
Remuneration Committee report for the financial
period ended 31 December 2020. This report sets
out the activities of the Remuneration Committee
during 2020.
The Committee met twice during the year to
determine the remuneration arrangements of the
Directors and senior employees.
Remuneration policy
The Committee aims to ensure that total
remuneration is set at an appropriate level for the
Group and its operations. The objectives and core
principles of the remuneration policy are to:
‣ ensure remuneration levels support the
Group’s strategy;
‣ ensure that there is an appropriate link
between performance and reward;
‣ ensure alignment of Directors, senior
management and shareholder interests;
‣ ensure that long-term incentives are linked to
shareholder return;
‣ enable the Group to recruit, retain and
motivate individuals with the skills,
capabilities and experience to achieve its
objectives; and
‣ strengthen teamwork by enabling all
employees to share in the success of the
business.
There are four elements of the remuneration
package for Executive Directors and senior
management:
‣ basic annual salary;
‣ benefits in kind;
‣ discretionary annual bonus; and
‣ long-term incentive plan.
Audit Committee
The Audit Committee consists of Oliver Andrews
(Committee Chairman) and Richard Carter. The
Audit Committee meets at least twice a year to
consider the annual and interim financial statements
and the audit plan. The Audit Committee is
responsible for ensuring that appropriate financial
reporting procedures are properly maintained and
reported upon, reviewing accounting policies and
for meeting the auditors and reviewing their reports
relating to the financial statements and internal
control systems.
Audit Committee Report
On behalf of the Board, I am pleased to present the
Audit Committee report for the financial period
ended 31 December 2020. This report sets out the
activities of the Audit Committee during 2020.
The Audit Committee is governed by terms of
reference which are agreed by the Board and
subject to annual review.
Principle responsibilities of the committee:
‣ Ensuring the financial performance of the
Group is properly reviewed, measured and
reported;
‣ Monitoring the quality and adequacy of
internal controls and internal control systems
implemented across the Group;
‣ Receive and review reports from the Group’s
management and auditors relating to the
interim and annual accounts;
Annual Report 2020
29
Chairman’s Corporate Governance Statement
‣ Reviewing risk management policies and
systems;
‣ Advising on the appointment, re-appointment
and remuneration of independent external
auditors, besides scheduling meetings with
external auditors independent of
management for discussions and reviews;
and
‣ Reviewing and monitoring the extent and
independence of non-audit services
rendered by external auditors.
Areas of focus during 2020
The Committee met three times in 2020 to execute
its responsibilities. Meetings focussed on audit
planning, risk management, internal controls and the
approval of the interim and final results including the
key judgements associated with acquisition
accounting, asset impairment review assumptions
and calculations, creditor completeness reviews and
the going concern requirements and statement.
Internal controls and risk
The Board assigns to the Committee the
responsibility of monitoring and improving the
Group’s internal controls governing the finances of
the business. The system of internal controls is vital
in managing the risks that face the Group and
safeguarding shareholders’ interests.
Audit Process
The Committee reviews the findings of
Haysmacintyre LLP and then approves the scope of
work to be undertaken for the next financial
reporting year, including the associated audit fees.
In addition, a review of the effectiveness of the
external audit process is undertaken and an annual
assessment of the external auditor’s independence
is made.
COMPANY CULTURE AND ETHICS
The Board of Directors seeks to embody and
promote a corporate culture that is based on sound
ethical values and behaviours. A culture of ethics
and compliance is at the core of a strong risk
management program.
The Board of Directors of ADM Energy plc has
adopted this code of ethics, to promote honest and
ethical conduct, including the ethical handling of
actual or apparent conflicts of interest; promote the
full, fair, accurate, timely and understandable
disclosure of the Company’s financial results in
accordance with applicable disclosure standards;
promote compliance with applicable governmental
laws, rules and regulations; and deter wrongdoing.
OLIVER ANDREWS
NON-EXECUTIVE CHAIRMAN
30 September 2021
30
Annual Report 2020
Report On Directors’ Remuneration
REPORT ON DIRECTORS’ REMUNERATION
REMUNERATION
The remuneration of the Directors has been fixed by the Board as a whole. The Board seeks to provide
appropriate reward for the skill and time commitment required so as to retain the right calibre of director at a
cost to the Group, which reflects current market rates.
The Board is responsible for the overall remuneration package for the Executive and Non-Executive
Directors. The Company’s remuneration policy is set out on page 29.
DIRECTORS’ EMOLUMENTS
Details of the remuneration package of each Director for the year are set out below:
2020
2020
2020
2020
2019
Fees and
emoluments
Pension
contributions
Termination
payment
Total
remuneration
Total
remuneration
£’000
£’000
£’000
£’000
50
240
184
30
13
13
47
−
577
−
35
24
−
−
−
−
−
59
−
−
−
−
−
−
−
10
10
50
275
208
30
13
13
47
10
646
2
106
149
8
−
−
76
399
740
Director
Peter Francis*
Osamede Okhomina
Richard Carter
Manuel Lamboley
Lord Bellingham
Dr Stefan Liebing
Directors who left
during year:
Sergio Lopez
Stefan Olivier
PENSIONS
No pension contributions were paid in respect of the directors for the year ended 31 December 2020 2019
£nil).
*Peter Francis stepped down from his Board position in 2021.
On behalf of the Board,
OLIVER ANDREWS
NON-EXECUTIVE CHAIRMAN
30 September 2021
Annual Report 2020
31
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
REPORT OF THE INDEPENDENT AUDITOR
TO THE MEMBERS OF ADM ENERGY PLC
OPINION
We have audited the financial statements of ADM Energy Plc (the ‘parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2020 which comprise the group income statement and statement
of comprehensive income, the group and company statements of financial position, the group statement of
changes in equity, the company statement of changes in equity, the group and company statements of cash
flows, and notes to the financial statements, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
‣ give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31
December 2020 and of the group’s loss for the year then ended;
‣ have been properly prepared in accordance with IFRSs as adopted by the European Union; 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
group 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.
32
Annual Report 2020
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to note 2 in the financial statements, which discloses that the Group requires additional
funding in the immediate future to meet its liabilities as they fall due, and that such funding has not yet been
secured. These events or conditions, along with other matters set forth in note 2, 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 directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the Group’s ability to continue to adopt the going concern basis of accounting included
reviewing and challenging cash flow forecasts prepared by management covering the period to 30
September 2022, considering the completeness of forecast expenditure and cash flow requirements for the
forecast periods and assessing the availability of stated sources of funding for the Group.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit approach is based on obtaining and maintaining a thorough understanding of the Group’s business,
structure and scope in order to undertake a risk based audit approach. This approach requires us to identify
relevant and appropriate significant risks of material misstatement and determine the most appropriate
tailored responses to this risk assessment. The extent of our work is determined by the level of risk in each
area and our assessment of materiality as discussed in this report.
The Group comprises a parent holding company and trading subsidiary (PR Oil & Gas Nigeria Limited)
together with two dormant subsidiaries.
Our audit scope included all components and was performed to group materiality, which is different to parent
company materiality (as laid out below). All components included the group financial statements were
subject to audit by Haysmacintyre LLP either on a statutory basis or at group level.
We did not identify any key audit matters relating to irregularities, including fraud. We introduced variability
into our audit tests and assessed the risk of management override on internal controls, including testing
journals and evaluating whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
Based on our understanding of the Group our audit was focused on the key risks as described below.
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
Annual Report 2020
33
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
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.
In addition to going concern, described in the material uncertainty related to going concern section above,
we determined the matters described below to be the key audit matters to be communicated in our report.
Valuation of the intangible asset
Key audit matter
The ability of the Group to realise the carrying value of its intangible assets held at 31
December 2020 may be adversely affected by various factors such as there being a
sustained decline in global oil and gas prices, and difficulties in obtaining investment to
fund further site development.
Audit response
Our audit work included, but was not restricted to the following:
‣ We reviewed a valuation of the Group’s development assets prepared by
management in conjunction with various valuation methodologies, including value in
use calculations, competent persons’ reports and observable market transactions.
‣ We considered and challenged the appropriateness of management’s selection of
the most reliable valuation methodology and how this related to the carrying value
of intangible assets in the Group’s Statement of Financial Position.
Valuation of liabilities
Key audit matter
The Group recognises liabilities in respect of its cost sharing obligations under the joint
operating agreement governing its interest in the OML 113 offshore license. These
liabilities have increased with the Group’s acquisition of an additional interest during the
year. There is a risk that changes in the Group’s interest arising during the year and
calculation errors may result in the balance being materially misstated.
Audit response
Our audit work included, but was not restricted to the following:
‣ We reviewed management’s reconciliation of its OML 113 cost sharing liabilities and
sought external confirmation as to their validity.
‣ We agreed a selection of inputs into this reconciliation to supporting audit evidence.
‣ We assessed the adequacy of disclosure of any uncertainties associated with this
balance.
EMPHASIS OF MATTER
We draw attention to notes 2 and 22 of the financial statements which disclose the uncertainty with, and the
use of judgement and estimation associated with an ongoing audit of historic cash calls on the OML 113
project and that accordingly, prospective changes in the Group’s liability position may arise.
34
Annual Report 2020
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable users that are taken based on the financial
statements. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as
we also take into account the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
We consider gross assets to be the financial metric of most interest to shareholders and other users of the
financial statements, accordingly this consideration influenced our judgement of materiality.
We determined materiality for the Group to be £280,000 which was set at 1.5% of draft gross assets. Parent
Company materiality was set at £210,000 on the same basis.
Performance materiality is the application of materiality at the individual account or balance level set at an
amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a whole. Performance
materiality for the Group was set at £210,000. Parent Company performance materiality was set at £206,250
on the same basis.
We agreed with the audit committee that we would report to the committee all individual audit differences
identified during the course of our audit in excess of £14,000 £13,370 for the Parent Company). We also
agreed to report differences below these thresholds that, in our view, warranted reporting on qualitative
grounds.
Materiality was reassessed during the audit and it was considered reasonable to maintain materiality at the
levels outlined above.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Annual Report 2020
35
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
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 Group and the parent 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 by the parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
‣ the parent Company financial statements are not in agreement with the accounting records and
returns; or
‣ certain disclosures of directors’ remuneration specified by law are not made; or
‣ we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 21, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the Group or
the parent Company or to cease operations, or have no realistic alternative but to do so.
36
Annual Report 2020
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
EXPLANATION AS TO WHAT EXTENT THE AUDIT WAS CONSIDERED
CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD
Based on our understanding of the Group, we identified that the principal risks of non-compliance with laws
and regulations related to compliance with AIM listing regulations, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the preparation of the financial statements such as the Companies
Act 2006, payroll tax and sales tax.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls) and determined that the principal risks were related to
posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit
procedures performed by the engagement team included:
‣ Inspecting correspondence with regulators and tax authorities;
‣ Discussions with management including consideration of known or suspected instances of non-
compliance with laws and regulation and fraud;
‣ Evaluating management’s controls designed to prevent and detect irregularities;
‣ Identifying and testing journals, in particular by obtaining a complete list of journals and reviewing
entries which showed key risk characteristics; and
‣ Challenging assumptions and judgements made by management in their critical accounting estimates
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.
Annual Report 2020
37
Report Of The Independent Auditor
To The Members Of Adm Energy Plc
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.
CHRISTOPHER CORK
SENIOR STATUTORY AUDITOR
for and on behalf of
Haysmacintyre LLP,
Statutory Auditor
10 Queen Street Place
London
EC4R 1AG
Date: 30 September 2021
38
Annual Report 2020
Group Income Statement And Statement
Of Comprehensive Income
GROUP INCOME STATEMENT AND
STATEMENT OF COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Continuing operations
Revenue
Operating costs
Administrative expenses
Impairment of investment
Consultancy fee income
Operating loss
Movement in fair value of investments
Finance costs
Loss on ordinary activities before taxation
Taxation
Loss for the year
Other Comprehensive income:
Exchange translation movement
Total comprehensive income for the year
Basic and diluted loss per share:
From continuing and total operations
2020
£’000
799
1,423
2,616
4,628
353
7,515
678
67
6,904
−
6,904
233
7,137
Note
3
9
4
11
5
7
8
2019
£’000
2,519
2,444
1,721
−
−
1,646
−
27
1,673
−
1,673
272
1,945
8.7)p
3.8)p
Annual Report 2020
39
Group And Company
Statements Of Financial Position
GROUP AND COMPANY STATEMENTS OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2020
NONCURRENT ASSETS
Intangible assets
Investment in subsidiaries
CURRENT ASSETS
Investments held for trading
Inventory
Trade and other receivables
Cash and cash equivalents
CURRENT LIABILITIES
Trade and other payables
Convertible loans
NET CURRENT LIABILITIES
NONCURRENT LIABILITIES
Convertible loans
Other borrowings
Decommissioning provision
GROUP
COMPANY
Notes
2020
£’000
2019
£’000
2020
£’000
2019
£’000
9
10
11
12
13
14
15
15
15
16
16,007
15,708
−
−
−
−
12,316
14,983
16,007
15,708
12,316
14,983
878
32
109
30
1,049
200
−
562
15
777
878
−
109
30
1,017
200
−
562
15
777
4,206
1,555
1,429
1,331
235
−
235
−
4,441
1,555
1,664
1,331
3,392
778
647
554
284
297
1,032
1,613
−
−
−
−
284
297
−
581
−
−
−
−
NET ASSETS
11,002
14,930
11,088
14,429
40
Annual Report 2020
Group And Company
Statements Of Financial Position
EQUITY
Share capital
Share premium
Other reserves
Currency translation reserve
Retained deficit
GROUP
COMPANY
Notes
2020
£’000
2019
£’000
2020
£’000
2019
£’000
17
17
18
9,450
8,817
9,450
36,591
34,012
36,591
817
850
870
617
817
−
8,817
34,012
870
−
35,006
28,152
35,770
29,270
Equity attributable to owners of the Company
and total equity
11,002
14,930
11,088
14,429
The financial statements were approved by the Board and ready for issue on 30 September 2021.
OSA OKHOMINA
DIRECTOR
Annual Report 2020
41
Group And Company
Statement Of Changes In Equity
GROUP STATEMENT OF CHANGES IN
EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Share
Share
capital
premium
Exchange
translation
reserve
Other
reserves
Retained
deficit
Total
equity
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2019
8,499
32,833
Loss for the year
Exchange translation
movement
Total comprehensive
expense for the year
−
−
−
Issue of new shares
318
Share issue costs
Share options lapsed
Share warrants lapsed/
cancelled
−
−
−
−
−
−
1,322
143
−
−
(345)
−
272
272
−
−
−
−
955
(27,034)
14,908
−
−
−
449
21
172
1,673
1,673
−
272
1,673
1,945
−
−
172
2,089
122
−
−
383
383
At 31 December 2019
8,817
34,012
617
870
28,152
14,930
Loss for the year
Exchange translation
movement
Total comprehensive
expense for the year
−
−
−
−
−
−
Issue of new shares
633
2,544
Share issue costs
Issue of convertible loans
Warrants issued in
settlement of fees
Warrants exercised
−
−
−
−
21
−
−
56
−
233
233
−
−
−
−
−
−
−
−
134
−
17
170
106
6,904
6,904
−
233
6,904
7,137
−
−
−
−
50
3,043
21
17
170
−
At 31 December 2019
9,450
36,591
850
817
35,006
11,002
42
Annual Report 2020
Group And Company
Statement Of Changes In Equity
Share
Share
capital
premium
Other
reserves
Retained
deficit
£’000
£’000
£’000
£’000
Total
equity
£’000
At 1 January 2019
8,499
32,833
955
28,208
14,079
Loss for the period and total
comprehensive expense
Issue of new shares
Share issue costs
Share options lapsed
Share warrants lapsed/cancelled
−
318
−
−
−
−
1,322
143
−
−
−
449
21
172
383
1,617
1,617
−
−
172
383
2,089
122
−
−
At 31 December 2019
8,817
34,012
870
29,270
14,429
Loss for the period and total
comprehensive expense
Issue of new shares
Share issue costs
Issue of convertible loans
Warrants issued in settlement of fees
Warrants exercised
−
633
−
−
−
−
−
−
6,550
6,550
2,544
134
21
−
−
56
−
17
170
106
−
−
−
−
50
3,043
21
17
170
−
At 31 December 2019
9,450
36,591
817
35,770
11,088
Annual Report 2020
43
Group And Company Statements Of Cash Flows
GROUP AND COMPANY STATEMENTS OF
CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
OPERATING ACTIVITIES
Loss for the period
Adjustments for:
Fair value adjustment to investments
Warrants issued in settlement of fees
Finance costs
Impairment of intangible assets
Depreciation and amortisation
GROUP
COMPANY
Note
2020
£’000
2019
£’000
2020
£’000
2019
£’000
6,904
1,673
6,550
1,617
678
170
67
4,628
85
−
−
27
112
678
170
67
4,996
−
−
−
27
−
Operating cashflow before working capital changes
2,632
1,534
1,995
1,590
Increase in inventories
Decrease/(increase) in receivables
Increase/(decrease) in trade and other payables
32
303
1,410
−
383
115
−
303
783
−
383
200
Net cash outflow from operating activities
951
2,032
909
1,773
INVESTMENT ACTIVITIES
Development costs
Loans to subsidiary operation
Net cash outflow from investment activities
FINANCING ACTIVITIES
Continuing operations:
Issue of ordinary share capital
Share issue costs
Proceeds from short term loans
181
−
181
848
21
278
−
−
−
1,939
122
−
−
181
181
848
21
278
−
245
245
1,939
122
−
Net cash inflow from financing activities
1,105
1,817
1,105
1,817
44
Annual Report 2020
Group And Company Statements Of Cash Flows
GROUP
COMPANY
Note
2020
£’000
2019
£’000
2020
£’000
2019
£’000
Net (decrease)/increase in cash and cash
equivalents from continuing and total
operations
Exchange translation difference
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
13
27
215
42
15
30
14
216
15
15
−
15
30
201
−
216
15
Annual Report 2020
45
Notes To The Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2020
1.GENERAL INFORMATION
The Company is a public limited company incorporated in the United Kingdom and its shares are listed on
the AIM market of the London Stock Exchange. The Company is an investment company, mainly investing
in natural resources and oil and gas projects. The registered office of the Company is as detailed in the
Company Information on page 3.
2.PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied throughout all periods presented in the financial
statements.
As in prior periods, the Group financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and interpretations issued by the
International Accounting Standards Board (IASB International Financial Reporting Standards as adopted
by the European Union (adopted IFRSs). The financial statements have been prepared using the
measurement bases specified by IFRS for each type of asset, liability, income and expense. The
measurement bases are more fully described in the accounting policies below.
The current period covered by these financial statements is the year to 31 December 2020. The
comparative figures relate to the year ended 31 December 2019. The financial statements are presented
in pounds sterling (£ which is the functional currency of the Group.
An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and
which have not been adopted early by the Group are presented below under ‘Statement of Compliance’.
GOING CONCERN
At 31 December 2020, the Group recorded a loss for the year of £6,904,000 and had net current liabilities
of £3,392,000, after allowing for cash balances of £30,000.
Since the year end, the Group has raised additional equity funding of £1,220,000 and realised £850,000
from the sale of investments to provide for working capital requirements, and the Directors have prepared
cashflow forecasts for the period to 30 September 2022 to assess whether the use of the going concern
basis for the preparation of the financial statements is appropriate. In the short term, the Group will require
further additional funding in order to meet its liabilities as they fall due and continue to operate as a going
concern. The Directors have taken into consideration the level and timing of the Group’s working capital
requirements (which takes into account recent reductions in costs and control of discretionary spending
to preserve cash flow) and has also considered the likelihood of successfully securing funding to meet
these needs. In particular, consideration has been given to ongoing discussions around further third-party
investment and the extent to which these discussions are advanced both in respect of short and longer
term funding.
46
Annual Report 2020
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
GOING CONCERN (continued)
The Directors acknowledge that while they have an expectation that funding will be secured based on this
assessment, at the date of approval of these financial statements, no such funding has been
unconditionally committed. Therefore, while the Directors have a reasonable expectation that the Group
has the ability to raise the additional finance required in order to continue in operational existence for the
foreseeable future, the uncertainty surrounding the ability and likely timing of securing such finance
indicates that a material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Were no such funding to be secured, the Group would have no realistic
alternative but to halt operations and prepare its financial statements on a non-going concern basis.
STATEMENT OF COMPLIANCE
New standards, amendments and interpretations adopted by the Company
The company has applied the following standards and amendments for the first time for its annual
reporting period commencing 1 January 2020
‣ Prepayment Features with Negative Compensation – Amendments to IFRS 9;
‣ Annual Improvements to IFRS Standards 20152017 Cycle;
‣ Plan Amendments, Curtailment or Settlement – Amendments to IAS 19;
There are several standards, amendments to standards and interpretations which have been issued by
the IASB that are effective in future accounting periods that the Group has not yet adopted. The most
significant of these are as follows, which are all effective for the period beginning 1 January 2021
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning after 1 January 2020 and have not been applied in preparing these financial
statements. None of these are expected to have a significant effect on the financial statements of the
Company.
The amendments listed above did not have any impact on the amounts recognised in prior periods and
are not expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning after 1 January 2020 and have not been applied in preparing these financial
statements. None of these are expected to have a significant effect on the financial statements of the
Company.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have
a material impact on the Company.
Annual Report 2020
47
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
KEY ESTIMATES AND ASSUMPTIONS
Estimates and assumptions used in preparing the financial statements are reviewed on an ongoing basis
and are based on historical experience and various other factors that are believed to be reasonable under
the circumstances. The results of these estimates and assumptions form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. judgement
also applies in determining whether costs associated with contingent liabilities can be reliably estimated or
not and the extent to which it is appropriate to make disclosure in this area.
USEFUL ECONOMIC LIFE OF INTANGIBLE ASSETS
The Group’s intangible assets relate to oil field development expenditure which is considered capital in
nature. Intangible assets are amortised over their useful economic life in accordance with the expected
pattern of consumption of the benefits arising from the Group’s interest in OML 113 license (the Unit of
Production method). The timing and pattern of production represents an estimation made with reference to
according research performed by third parties and the Directors assessment of the timing and level of
activity over the life of developed assets.
IMPAIRMENT OF ASSETS
Note 10 summarises the cumulative cost less amortisation of Group’s indirect investment in the Aje Field
(OML 113. During the year, the Directors noted indicators of impairment related to this asset. They have
therefore reviewed the value of the Group’s proportionate share of the Aje fixed assets (which as a cash
generating unit is represented by the intangible asset relating to the cumulative cost of its acquisition and
funding of its interest in the Aje Field) and have determined that it is appropriate to impair the asset down
to the fair value as implied by the value of the recent Petronor/Panoro transaction which as at 31 December
2020 was considered by the Directors to represent the most relevant and reliable available indicator of
value against a backdrop of market and operation uncertainty prevalent at the time. The Directors have
considered other valuation indicators such as value in use calculations and fair value assessments based
on seismic reports, but these are not considered to give the same reliable indication of value as a publicly
announced transaction between two third parties. It should be noted that the referenced Petronor/Panoro
transaction is subject to adjustments to take into account it is a corporate transaction rather than a
valuation of a group of assets identified as a cash generating unit. Such adjustments are subject to
judgement and estimation by the directors, as are adjustments for other implied factors such as contingent
consideration associated with the transaction. The carrying value of the parent company’s investment in
subsidiaries is also derived using the same valuation techniques, judgements and estimations, but modified
for the fact it represents the valuation of an investment in a legal entity.
CONTINGENT LIABILITIES
The assessment of contingent liabilities inherently involves the exercise of significant judgment and
estimates of the outcome of future events. This judgement involves the Directors making assessment as to
whether an economic outflow relating to a past event is considered probable, possible or remote, and the
extent to which its outcome can be reliably estimated. In making this judgement, the Directors make
48
Annual Report 2020
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
CONTINGENT LIABILITIES (continued)
reference to correspondence with parties relevant to the contingent liability and make their own
assessment of whether they have sufficient information from such correspondence to reliably predict an
outcome.
INVESTMENTS HELD FOR TRADING
Investments held for trading are held at fair value through profit and loss. At both reporting dates they are
considered to be Level 3 investments whereby their valuation is determined by whole or in part using
valuation techniques based on assumptions that are not supported by observable prices in comparable
market transactions in the same instrument or similar observable data.
The Directors regularly review the valuation of such investments against both ongoing results of the
business in which it has made investments and the price at which any further investment has taken place if
such investment is considered to give sufficient and appropriate indication of fair value.
DECOMMISSIONING PROVISION
Decommissioning costs will be incurred by the Group, in accordance with the terms of the Joint Operating
Agreement, at the end of the operating life of the production facilities associated with the Group’s interest
in OML 113. The Group assesses its retirement obligation at each reporting date. The ultimate asset
retirement costs are uncertain and cost estimates can vary in response to many factors, including changes
to relevant legal requirements, the emergence of new restoration techniques or experience at other
production sites. The expected timing, extent and amount of expenditure can also change, for example in
response to changes in reserves or changes in laws and regulations or their interpretation. Therefore,
significant estimates and assumptions are made in determining the provision for asset retirement
obligation. As a result, there could be significant adjustments to the provisions established which would
affect future financial results. The provision at reporting date represents management’s best estimate of
the present value of the future asset retirement costs required.
SHARE BASED PAYMENTS
The Group has made awards of options and warrants over its unissued share capital to certain Directors,
employees and professional advisers as part of their remuneration.
The fair value of options and warrants are determined by reference to the fair value of the options and
warrants granted, excluding the impact of any non-market vesting conditions. In accordance with IFRS 2
‘Share Based Payments’, the Group has recognised the fair value of options and warrants, calculated using
the Black-Scholes option pricing model. The Directors have made assumptions particularly regarding the
volatility of the share price at the grant date in order to reach a fair value. Further information is disclosed in
Note 19.
Annual Report 2020
49
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
ACCOUNTING POLICIES
SALES REVENUE
The Group’s revenue is derived from its share in oil and gas licence OML 113, offshore Nigeria Revenue, as
outlined in the Joint Operating Agreement. Revenue from the sale of crude oil is the Group’s share of
proceeds from liftings net of any direct taxes and is recognised when a customer obtains control (“sales” or
“lifting” method), normally this is when title passes at point of delivery. Revenues from production of oil
properties are recognised based on actual volumes lifted and sold to customers during the period.
TAXATION
UK taxes
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting period, that are unpaid at the statement of financial position date.
They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they
relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognised
as a component of tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the
comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with
their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor
on the initial recognition of an asset or liability, unless the related transaction is a business combination or
affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other
income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that
it is probable that they will be able to be offset against future taxable income. Deferred tax assets and
liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective
period of realisation, provided they are enacted or substantively enacted at the statement of financial
position date.
Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the
income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of
assets or liabilities that is charged directly to equity are charged or credited directly to equity.
Nigerian taxes
The Company’s subsidiary, P R Oil & Gas Nigeria Ltd operates offshore Nigeria and is subject to the tax
regulations of that country.
Current income tax assets and liabilities for current period are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws are those that are enacted or
substantially enacted at the reporting date. The Company engaged in exploration and production of crude
oil (upstream activity). Therefore, its profits are taxable under the Petroleum Profit Tax Act.
50
Annual Report 2020
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
INTANGIBLE ASSETS
Intangible assets relate to the Group’s capitalised E&E costs and proportionate interest in the production
assets of joint operations (development costs).
The share of development costs incurred on specific projects are capitalised when all the following
conditions are satisfied:
‣ completion of the asset is technically feasible so that it will be available for use or sale
‣ the Group intends to complete the asset and use or sell it
‣ the Group has the ability to use or sell the asset
‣ the asset will generate probable future economic benefits
‣ there are adequate technical, financial and other resources to complete the development and to use
or sell the asset, and
‣ the expenditure attributable to the asset during its development can be measured reliably.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period. There were no development costs recognised as an expense during the year (2019 £Nil).
Intangible assets are amortised as the benefits associated with them are consumed.
IMPAIRMENT OF INTANGIBLE ASSETS
Proven oil and gas properties and intangible assets are reviewed annually for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
carrying value is compared against the expected recoverable amount of the asset, generally by net present
value of the future net cash flows, expected to be derived from production of commercial reserves or
consideration expected to be achieved through the sale of its interest in an arms-length transaction, less
any associated costs to sell. The cash generating unit applied for impairment test purposes is generally the
field and the Group’s interest in its underlying assets, except that a number of field interests may be
grouped together where there are common facilities.
FINANCIAL ASSETS
Financial assets are recognised in the Group’s statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
The Group’s financial assets are classified into the following specific categories: ‘investments held for
trading’, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial
assets and is determined at the time of initial recognition.
Annual Report 2020
51
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
FINANCIAL ASSETS (continued)
All Trade receivables, loans, and other receivables that have fixed or determinable payments that are not
quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at
amortised cost using the effective interest method, less any impairment. Interest income is recognised by
applying the effective interest rate, except for short-term receivables when the recognition of interest
would be immaterial.
INVESTMENTS HELD FOR TRADING
All investments determined upon initial recognition as held at fair value through profit or loss were
designated as investments held for trading. Investment transactions are accounted for on a trade date
basis. Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which
comprises the proceeds of sale less any transaction cost. The fair value of the financial instruments in the
statement of financial position is based on the quoted bid price at the statement of financial position date,
with no deduction for any estimated future selling cost. Unquoted investments are valued by the directors
using primary valuation techniques such as recent transactions, last price at which shares have been
issued and net asset value. Changes in the fair value of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the consolidated statement of comprehensive income
as “Net gains on investments”. Investments are initially measured at fair value plus incidental acquisition
costs. Subsequently, they are measured at fair value in accordance with IFRS 9 Financial Instruments. This
is either the bid price or the last traded price, depending on the convention of the exchange on which the
investment is quoted.
BASIS OF CONSOLIDATION
The consolidated financial statements present the results of ADM Energy plc and its subsidiaries (“the
Group”) as if they formed a single entity. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase
method. In the Statement of Financial Position, the acquiree’s identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition date. The results of acquired
operations are included in the Consolidated Income Statement.
JOINT OPERATIONS OML 113 OPERATING AGREEMENT
The Group has a 9.2% profit share and 12.3% cost share in the OML 113 operating licence. The operating
agreement for OML 113 is a joint arrangement, with the fundamental decisions requiring unanimity between
the partners. Other decisions require a qualified majority decision. As no corporate entity exists the
agreement cannot be considered to meet the definition of a joint venture.
52
Annual Report 2020
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
JOINT OPERATIONS OML 113 OPERATING AGREEMENT (continued)
In relation to its interests in the OML 113 operations, the Group recognises its:
‣ The Group’s share of the underlying assets of the joint operation (classified as intangible assets),
measured at historical cost less amortisation and impairment.
‣ Amounts owed in respect of the joint operating agreement
‣ Revenue from the sale of its share of the output arising from the joint operation
‣ Expenses, including its share of any expenses incurred jointly
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to
an insignificant risk of changes in value.
EQUITY
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds
received net of direct issue costs.
Equity comprises the following:
‣ Share capital represents the nominal value of equity shares 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.
‣ Option reserve represents the cumulative cost of share based payments in respect of options
granted.
‣ Warrant reserve represents the cumulative cost of share based payments in respect of warrants
issued.
‣ Convertible loan note reserve represents the equity portion of convertible loan notes issued.
‣ Currency translation reserve is used to recognise foreign currency exchange differences arising on
translation of functional currency to presentation currency.
‣ Retained earnings include all current and prior period results as disclosed in the statement of
comprehensive income.
Annual Report 2020
53
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
FINANCIAL LIABILITIES
Financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a
party to the contractual provisions of the instrument. All interest related charges are recognised as an
expense in finance cost in the income statement using the effective interest rate method.
The Group’s financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less
settlement payments.
DECOMMISSIONING LIABILITY
A decommissioning liability is recognised when the Group has a present legal or constructive obligation as
a result of past events, and it is probable that an outflow of resources will be required to settle the
obligation, and a reliable estimate of the amount of obligation can be made. A corresponding amount
equivalent to the obligation is also recognised as part of the cost of the related production plant and
equipment. The amount recognised is the estimated cost of decommissioning, discounted to its present
value, using a discount rate of 10%. Changes in the estimated timing of decommissioning cost estimates
are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment
to production plant and equipment. The unwinding of the discount on the decommissioning provision will
be included in the income statement.
CONTINGENT LIABILITIES
Contingent liabilities are possible obligations arising from past events whose existence will be confirmed by
uncertain future events that are not wholly within the control of the Group. Contingent liabilities also
include obligations that are not recognised because their amount cannot be measured reliably or because
settlement is not probable.
Unless the possibility of an outflow of economic resources is remote a contingent liability is disclosed in the
notes.
SHARE BASED PAYMENTS
Where share options are awarded, or warrants issued to employees, the fair value of the options/warrants
at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-
market vesting conditions are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting
period is based on the number of options/warrants that eventually vest. 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 warrants or options are issued for services provided to the Group, including financing, the fair value
of the service is charged to the statement of comprehensive income or against share premium where the
warrants or options were issued in exchange for services in connection with share issues. Where the fair
value of the services cannot be reliably measured, the service is valued using Black Scholes valuation
methodology taking into consideration the market and non- market conditions described above.
54
Annual Report 2020
Notes To The Financial Statements
2.PRINCIPAL ACCOUNTING POLICIES (continued)
SHARE BASED PAYMENTS (continued)
Where the share options are cancelled before they vest, the remaining unvested fair value is immediately
charged to the statement of comprehensive income.
FOREIGN CURRENCIES
The Directors consider Sterling to be the currency that most faithfully represents the economic effects of
the underlying transactions, events and conditions. The financial statements are presented in Sterling,
which is the Group’s functional and presentation currency.
Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of
the transactions. Foreign currency exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
at year end exchange rates are recognised in the income statement. Non-monetary items that are
measured at historical costs in a foreign currency are translated at the exchange rate at the date of the
transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into
the functional currency using the exchange rates at the date when the fair value was determined.
SEGMENTAL REPORTING
A segment is a distinguishable component of the Group’s activities from which it may earn revenues and
incur expenses, whose operating results are regularly reviewed by the Group’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.
As the chief operating decision maker reviews financial information for and makes decisions about the
Group’s investment activities as a whole, the directors have identified a single operating segment, that of
holding and trading in investments in natural resources, minerals, metals, and oil and gas projects. The
Directors consider that it would not be appropriate to disclose any geographical analysis of the Group’s
investments.
No segmental analysis has been provided in the financial statements as the Directors consider that the
Group’s operations comprise one segment.
3.REVENUE
The Group has a share in an oil and gas licence offshore Nigeria and all the Group’s revenue is derived from
this source.
Revenue from share in oil and gas licence offshore Nigeria
Annual Report 2020
2020
£’000
799
799
2019
£’000
2,519
2,519
55
Notes To The Financial Statements
4.OPERATING LOSS
Loss from continuing operations is arrived at after charging:
Directors’ remuneration (see note 6
Employee salaries and other benefits
Amortisation
Impairment of intangible assets
Auditors’ remuneration:
2020
2019
£’000
£’000
646
35
85
4,628
824
34
112
−
fees payable to the principal auditor for the audit of the Group’s financial
statements
28
21
5.FINANCE COSTS
Short term loan finance costs
2020
£’000
67
67
2019
£’000
27
27
6.EMPLOYEE REMUNERATION
The expense recognised for employee benefits for continuing operations is analysed below:
Wages and salaries (including directors and employee benefits)
Directors’ termination payments
Social security costs
Directors’ remuneration:
Wages and salaries (including benefits)
Social security costs
2020
2019
£’000
£’000
671
10
66
747
646
64
710
531
240
87
858
740
84
824
Further details of Directors’ remuneration are included in the Report on Directors’ Remuneration on page
21.
Only the directors are deemed to be key management. The average number of employees (including
directors) in the Group was 5 20195.
56
Annual Report 2020
Notes To The Financial Statements
7.INCOME TAX EXPENSE
Current tax – continuing operations
2020
£’000
−
2020
£’000
2019
£’000
−
2019
£’000
Loss before tax from continuing operations
6,904
1,673
Loss before tax multiplied by rate of corporation tax in the UK
of 19% 2019 19%
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Total tax charge for the year
1,312
318
890
422
−
6
312
−
No deferred tax asset has been recognised in respect of the Group losses as the timing of their
recoverability is uncertain.
8.EARNINGS AND NET ASSET VALUE PER SHARE
Earnings
The basic and diluted earnings per share is calculated by dividing the loss attributable to owners of the
Group by the weighted average number of ordinary shares in issue during the year.
Loss attributable to owners of the Group
Continuing operations
Continuing and discontinued operations
Weighted average number of shares for calculating basic
and fully diluted earnings per share
2020
£’000
6,904
6,904
2020
2019
£’000
1,673
1,673
2019
79,594,655
44,280,670
2020
pence
2019
pence
Earnings per share:
Loss per share from continuing and total operations
8.7
3.8
The weighted average number of shares used for calculating the diluted loss per share for 2020 and 2019
was the same as that used for calculating the basic loss per share as the effect of exercise of the
outstanding share options was anti-dilutive.
Annual Report 2020
57
Notes To The Financial Statements
8.EARNINGS AND NET ASSET VALUE PER SHARE (continued)
Net asset value per share (“NAV”)
The basic NAV is calculated by dividing the loss total net assets attributable to the owners of the Group by
the number of ordinary shares in issue at the reporting date. The fully diluted NAV is calculated by adding
the cost of exercising any extant warrants and options to the total net assets and dividing the resulting
total by the sum of the number of shares in issue and the number of warrants and options extant at the
reporting date.
Total net assets of the Group
Cost of exercise of warrants
Total net assets for calculation of fully diluted NAV
2020
£’000
2019
£’000
11,002
14,930
1,715
12,717
2020
1,261
16,191
2019
Number of shares in issue at the reporting date
122,769,073
59,501,210
Number of extant warrants (see note below)
27,726,241
18,801,601
Total number of shares for calculation of fully diluted NAV
150,594,655
78,302,811
NAV Basic (pence per share)
NAV Fully diluted (pence per share)
2020
9.0p
8.5p
2019
25.1p
20.7p
58
Annual Report 2020
Notes To The Financial Statements
9.INTANGIBLE ASSETS
GROUP
The intangible asset relates to the Group’s 5% revenue interest in the OML 113 licence, which includes the
Aje Field (“Aje”) and the further costs of bringing the Aje 4 and Aje 5 wells into production. During the year
the Group paid $3 million (£2,256,000 to acquire a further interest in the Aje which increased its revenue
interest to 9.2% and 12.3% cost share.
Development costs
Cost
At 1 January
Additions
Foreign currency exchange translation difference
At 31 December
Amortisation
At 1 January 2018
Charge for year
Impairment
Foreign currency exchange translation difference
At 31 December 2018
Net book value at 31 December
2020
£’000
16,071
5,287
282
21,076
363
85
4,628
7
5,069
16,007
2019
£’000
16,362
−
291
16,071
256
112
−
5
363
15,708
Development costs are amortised on a useful economic basis which is aligned with output in a given
financial period compared to total proven and possible production. Production is expected to continue until
2039. The adoption of the units of production method of amortisation means amortisation will not accrue
evenly to this date, rather it will vary according to production levels which are considered to equate to
consumption of the cost of the asset.
Annual Report 2020
59
Notes To The Financial Statements
10.INVESTMENT IN SUBSIDIARIES
On 10 August 2016, the Group completed the agreement for the acquisition of Jacka Resources Nigeria
Holdings Limited, now renamed ADM 113 Limited (“ADM 113”), a BVI registered company, in which Jacka
Resources Limited (“JRL”) held the single issued share. ADM 113’s sole asset is its wholly owned subsidiary,
P R Oil & Gas Nigeria Limited (“PROG”), a Nigerian registered company. At the beginning of the year PROG
had a 5% revenue interest in the OML 113 licence, offshore Nigeria, which includes the Aje Field ("Aje"),
where oil production commenced in May 2016. During the year it paid US$4 million (£2,256,000 to acquire
a further interest in Aje which increased its revenue interest to 9.2%.
Balance at beginning of period
Advances to PROG
Impairment
Balance at end of period
The Group’s subsidiary companies are as follows:
Name
Principal activity
Country of incorporation
and principal
place of business
2020
£’000
2019
£’000
14,983
14,738
2,329
4,996
245
−
12,316
14,983
Proportion of
ownership interest
and voting rights
held by the Group
ADM 113 Limited
Holding company
British Virgin Islands
100%
*P R Oil & Gas
Nigeria Limited
Oil exploration &
production
Maples Corporate Services (BVI
Ltd
Kingston Chambers
P.O. Box 173, Road Town, Tortola
Nigeria
1, Murtala Muhammed Drive
Ikoyi, Lagos
Geo Estratos
MXOil, SAPI de CV
Dormant
Mexico
Lago Alberto 319, Piso 6
IZA Punto Polanco
Col. Granada, Del. Miguel Hidalgo
CP 11520, Ciudad de Mexico
100%
100%
ADM Asset
Holdings Limited
Dormant
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
100%
*Indirectly held
60
Annual Report 2020
Notes To The Financial Statements
11.INVESTMENTS HELD FOR TRADING
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is
significant to the fair value measurement of the relevant asset as follows (see note 19.
The investments held by the Group are designated as at fair value through profit or loss.
Fair value of investments brought forward
Movement in fair value of investments
Fair value of investments held for trading
Investments held at the year end were categorised as
follows
Level 3
GROUP AND COMPANY
2020
£’000
200
678
878
878
878
2019
£’000
200
−
200
200
200
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is
significant to the fair value measurement of the relevant asset as follows:
Level 1 valued using quoted prices in active markets for identical assets.
Level 2 valued by reference to valuation techniques using observable inputs other than quoted prices
included within Level 1.
Level 3 valued by reference to valuation techniques using inputs that are not based on observable market
data.
The valuation techniques used by the company are explained in the accounting policy note, “Financial
assets held at fair value through profit and loss”. There are no Level 1 and Level 2 investments.
Annual Report 2020
61
12.TRADE AND OTHER RECEIVABLES
Other receivables
Prepayments and accrued income
Notes To The Financial Statements
GROUP
COMPANY
2020
2019
2020
2019
£’000
£’000
£’000
£’000
42
67
109
498
64
562
42
67
109
498
64
562
The fair value of Other receivables is considered by the Directors not to be materially different to carrying
amounts. At the date of the Statement of Financial Position in 2020 and 2019 there were no trade
receivables.
13.CASH AND CASH EQUIVALENTS
Cash at bank
Cash and cash equivalents
14.TRADE AND OTHER PAYABLES
GROUP AND COMPANY
2020
£’000
30
30
2019
£’000
15
15
GROUP
COMPANY
2020
2019
2020
2019
£’000
£’000
£’000
£’000
Trade payables
Tax and social security
468
395
Amount owed in respect of OML 113 operating agreement
2,766
Other payables
Short term loan finance
Accruals and deferred income
71
104
402
327
132
213
678
−
205
468
395
−
71
104
391
327
132
−
678
−
194
It is expected that the amount owed in relation to the Group’s proportionate share of costs incurred as part
of the OML 113 joint operating agreement will be offset against revenues of the project.
The fair value of trade and other payables is considered by the Directors not to be materially different to
carrying amounts.
4,206
1,555
1,429
1,331
62
Annual Report 2020
Notes To The Financial Statements
15.BORROWINGS
Convertible loans (“CLNs”)
On 15 August 2020 the Group entered into 12 month convertible loan agreements for a total of £230,000
with interest payable at 10%. On 10 December 2020 the Company issued a convertible loan note for
US$400,000 £293,000 as part consideration for the acquisition of its additional interest in Aje. The loan
note is repayable on 10 June 2022 and bears interest at 10% p.a.
The net proceeds received from the issue of the CLNs have been split between the liability element and an
equity component, representing the fair value of the embedded option to convert the liability into equity of
the Group, as follows
Nominal value of convertible Loans
Equity component
Liability component at date of issue
Interest charged
Liability component at 31 December
Current portion of loans
Non-current portion of loans
GROUP AND COMPANY
2020
£’000
523
17
506
13
519
235
284
519
2019
£’000
−
−
−
−
−
−
−
−
The interest charged for the year is calculated by applying an effective average interest rate of 12% to the
liability component for the period since the loan notes were issued.
The directors estimate the fair value of the liability component of the convertible loan notes at 31 December
2020 to be approximately £519,000. The fair value has been calculated by discounting the future cash flows
at the market rate of 12%.
Other borrowings
Other loan
2020
£’000
297
2019
£’000
−
Annual Report 2020
63
Notes To The Financial Statements
15.BORROWINGS (continued)
Other borrowings (continued)
£50,000 of the other loan was converted into shares subsequent to the year end. The balance of the loan,
which was shown as a current liability in 2019, is non-interest bearing and its repayment date is 15 May
2023. The loan agreement gives the Group the right to convert the balance owed into shares at the ruling
market rate at a time at the discretion of the Group. The balance has been re-presented as non-current
due to a modification affected during the year which reduced the balance to £297,000 from £650,000,
which also clarified the terms of the agreement. The loan gives the Group the right to convert the
outstanding balance into the equivalent value of equity at any time during the term. The loan is treated as a
liability because while the value of equity to be issued on conversion is fixed, the number of shares is
variable, meaning it meets the definition of a financial liability as laid out by IFRS 9.
16.DECOMMISSIONING PROVISIO0N
In accordance with the agreements and legislation, the wellheads, production assets, pipelines and other
installations may have to be dismantled and removed from oil and natural gas fields when the production
ceases. The exact timing of the obligations is uncertain and depends on the rate the reserves of the field
are depleted. However, based on the existing production profile of the OML 113 licence area and the size of
the reserves, it is expected that expenditure on retirement is likely to be after more than ten years. The
current basis for the provision is a discount rate of 10%.
The following table presents a reconciliation of the beginning and ending aggregate amounts of the
obligations associated with the decommissioning of oil and natural gas properties.
Balance brought forward
Arising during the year
As at 31 December 2020
2020
£’000
−
1,032
1,032
2020
£’000
−
−
−
In previous years it has been considered that the required decommissioning provision was not material, but
following the acquisition of the additional share in the OML 113 licence the Directors have reassessed the
materiality of the required provision.
64
Annual Report 2020
Notes To The Financial Statements
17.CALLED UP SHARE CAPITAL
Number of
Ordinary
shares
Value
£’000
Number of
deferred shares
Value
£’000
Share
Premiu
m
£’000
Total
value
£’000
Issued and fully paid
At 1 January 2019 (ordinary
shares of 0.01p)
2,771,349,664
277
8,222,439,370
8,222
8,499 32,833
Shares issued
Share issue costs
1,700,000,036
170
−
−
−
−
−
−
170
−
510
10
4,471,349,700
447
8,222,439,370
8,222
8,669 33,333
1 for 100 share consolidation
(ordinary shares of 1p)
44,713,497
447
8,222,439,370
8,222
8,669 33,333
Shares issued (see notes below)
14,787,713
148
Warrants issued to share
subscribers
Share issue costs
−
−
−
−
−
−
−
−
−
−
148
1,111
−
−
299
133
At 31 December 2019
59,501,210
595
8,222,439,370 8,222
8,817 34,012
Shares issued (see notes below)
63,267,863
633
Warrants issued in connection
with equity subscriptions
Share issue costs
Warrants exercised
−
−
−
−
−
−
−
−
−
−
−
−
−
−
633
2,560
−
−
−
16
21
56
122,769,073
1,228
8,222,439,370 8,222
9,450 36,591
The deferred shares have restricted rights such that they have no economic value.
Annual Report 2020
65
Notes To The Financial Statements
17.CALLED UP SHARE CAPITAL (continued)
Share issues in year
On 8 January 2020, 2,148,000 ordinary shares of 1p were issued at 7p each as a result of a placing, raising
£150,360 before expenses.
On 27 April 2020, 2,083,333 ordinary shares of 1p were issued at 2.4p each as a result of a placing, raising
£50,000 before expenses, and 6,350,000 shares were issued at 2.4p each to settle liabilities totaling
£152,400.
On 14 May 2020, 4,242,696 shares of 1p were issued to the Hessia Group at 2.4p each to settle US$
150,000 £101,825 of the deposit in respect of the acquisition of a further interest in the Aje field.
On 17 July 2020, 2,083,333 ordinary shares of 1p were issued at 2.4p each as a result of the exercise of
warrants, raising £50,000, and 208,333 ordinary shares were issued also at 2.4p each to settle a liability of
£5,000.
On 25 August 2020, 8,590,906 ordinary shares of 1p were issued at 5.5p each as a result of a placing, raising
£472,500 before expenses, and 7,196,322 ordinary shares were issued also at 5.5p in settlement of liabilities
totaling £395,798.
On 26 August 2020, 5,083,333 ordinary shares of 1p were issued at 2.4p each as a result of the exercise of
warrants, raising £122,000, and 416,667 ordinary shares were issued also at 2.4p each to settle a liability of
£10,000.
On 14 May 2020, 21,344,262 shares of 1p were issued at 7p each and 3,395,678 ordinary shares were issued
at 5.5p each, all to the Hessia Group, to settle US$ 2,250,000 £1,680,861 being the balance due for the
acquisition of a further interest in the Aje Field.
66
Annual Report 2020
Notes To The Financial Statements
18.OTHER RESERVES
Shares to be
issued
Reserve for
options
granted
Reserve for
warrants
issued
Convertible
loan note
reserve
Other
reserves
£’000
£’000
£’000
£’000
£’000
Balance at 1 January 2019
Issue of new shares
Share issue costs
Share options lapsed
Share warrants lapsed/
cancelled
Balance at 31 December 2019
Issue of new shares
Warrants issued in settlement
of fees
Warrants exercised
Issue of convertible loans
Balance at 31 December 2020
19.SHARE WARRANTS
−
150
−
−
−
150
150
−
−
−
−
172
−
−
172
−
−
−
−
−
−
−
783
299
21
−
383
720
16
170
106
−
800
−
−
−
−
−
−
−
−
−
17
17
955
155
21
172
383
870
134
170
106
17
817
In the following paragraphs the number of warrants issued prior to June 2019 have been adjusted to reflect
the 1 for 100 share consolidation.
On 8 January 2020, the Company issued 2,148,000 share warrants to advisers in respect of a private
placing. The warrants are exercisable at 8p per share for a period of 2 years from the date of issue.
On 6 May 2020, the Company issued 8,333,333 share warrants in respect of arrangement fees. The
warrants are exercisable at 2.4p per share for a period of 2 years from the date of issue.
On 25 August 2020, the Company issued 4,705,882 share warrants in respect of arrangement fees. The
warrants when issued were exercisable at 5.5p per share for a period of 2 years from the date of issue. In
accordance with the warrant agreement the exercise price of these warrants has subsequently been
amended to 4.25p per share. On the same date 909,091 warrants were issued in settlement of consultancy
fees, exercisable at 5.5p per share for a period of 2 years from the date of issue. Also on the same date
120,000 warrants were issued in connection with an equity subscription, exercisable at 5.5p per share for a
period of 5 years from the date of issue.
Annual Report 2020
67
Notes To The Financial Statements
19.SHARE WARRANTS (continued)
The fair value of the share warrants at the date of issue was calculated by reference to the Black-Scholes
model. The significant inputs to the model in respect of the warrants issued in the year were as follows:
Issue date
Issue date
share price
8 Jan
2020
6 May
2020
25 Aug
2020
25 Aug
2020
25 Aug
2020
10 April
2019
Oct/Nov
2019
4.75p
2.4p
5.5p
5.5p
5.5p
5.5p
5.025p
Exercise price
per share
8p
2.4p
4.25p
5.5p
5.5p
4p
8p
No. of
warrants
2,148,000 8,333,333
4,705,882 909,091
120,000
8,000,000
12,726,001
Risk free rate
1%
1%
1%
1%
1%
1%
1%
Expected
volatility
Expected life
of warrant
Calculated fair
value per
share
50%
50%
50%
50%
50%
50%
50%
2 years
2 years
2 years
2 years
5 years
5 years
2 years
0.58612p
0.68054p
2.09916p
1.55958p
2.41010p
2.9133p
0.6896p
The share warrants outstanding at 31 December 2020 and their weighted average exercise price are as
follows:
2020
2019
Weighted
average
exercise price
Number
(pence)
18,801,601
2,148,000
8,333,333
4,705,882
1,029,091
7,291,666
6.71
8.00
2.40
4.25
5.50
2.40
Number
866,667
8,000,000
12,726,601
-
-
1,925,000
-
-
866,667
Outstanding at 1 January
Issued
Issued
Issued
Issued
Exercised
Lapsed or cancelled
Outstanding at 31 December
27,726,241
6.18
18,801,601
Weighted average
exercise price
(pence)
123.00
4.00
8.00
-
-
4.00
123.00
6.71
68
Annual Report 2020
Notes To The Financial Statements
19.SHARE WARRANTS (continued)
The fair value of the share warrants recognised as part of the premium paid in respect of the share
subscriptions in the year was £16,000 and in respect of the share warrants issued in settlement of fees
£170,000 was recognised as the fair value expense in the income statement. Both these amounts were
credited to the share warrant reserve. In 2019, £320,000 was recognised in the financial statements as the
fair value of warrants issued.
20.RISK MANAGEMENT OBJECTIVES AND POLICIES
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are:
‣ to safeguard the Group's ability to continue as a going concern, so that it continues to provide
returns and benefits for shareholders;
‣ to support the Group's growth; and
‣ to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital
structure and equity holder returns, taking into consideration the future capital requirements of the Group
and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected
capital expenditures and projected strategic investment opportunities. Management regards total equity as
capital and reserves, for capital management purposes.
The Group is exposed to a variety of financial risks which result from both its operating and investing
activities. The Group’s risk management is coordinated by the board of directors, and focuses on actively
securing the Group’s short to medium term cash flows by minimising the exposure to financial markets.
Management review the Group’s exposure to currency risk, interest rate risk, liquidity risk on a regular basis
and consider that through this review they manage the exposure of the Group on a near term needs basis.
There is no material difference between the book value and fair value of the Group’s cash.
MARKET PRICE RISK
The Group’s exposure to market price risk mainly arises from potential movements in the fair value of its
investments. The Group manages this price risk within its long-term investment strategy to manage a
diversified exposure to the market. If each of the Group’s equity investments were to experience a rise or
fall of 10% in their fair value, this would result in the Group’s net asset value and statement of
comprehensive income increasing or decreasing by £88,000 2019 £20,000.
Annual Report 2020
69
Notes To The Financial Statements
20.RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
INTEREST RATE RISK
The Group and Company manage the interest rate risk associated with the Group’s cash assets by
ensuring that interest rates are as favourable as possible, whilst managing the access the Group requires
to the funds for working capital purposes.
The Group’s cash and cash equivalents are subject to interest rate exposure due to changes in interest
rates. Short-term receivables and payables are not exposed to interest rate risk.
CREDIT RISK
The Group's financial instruments, which are exposed to credit risk, are considered to be mainly loans and
receivables, and cash and cash equivalents. The credit risk for cash and cash equivalents is not considered
material since the counterparties are reputable banks. The maximum exposure to credit risk for loans and
receivables is as set out in the table below, and relates to the financing of the Group’s joint venture
interests.
The Group's exposure to credit risk is limited to the carrying amount of the financial assets recognised at
the balance sheet date, as summarised below:
Cash and cash equivalents
Loans and receivables
LIQUIDITY RISK
2020
£’000
30
42
72
2019
£’000
15
498
513
Liquidity risk is managed by means of ensuring sufficient cash and cash equivalents are held to meet the
Group’s payment obligations arising from administrative expenses. The cash and cash equivalents are
invested such that the maximum available interest rate is achieved with minimal risk.
70
Annual Report 2020
Notes To The Financial Statements
21.FINANCIAL INSTRUMENTS
The Group uses financial instruments, other than derivatives, comprising cash to provide funding for the
Group's operations.
CATEGORIES OF FINANCIAL INSTRUMENTS
The IFRS 9 categories of financial asset included in the statement of financial position and the headings in
which they are included are as follows:
FINANCIAL ASSETS
Cash and cash equivalents
Investments held for trading (see fair value measurements below)
FINANCIAL ASSETS BY IFRS 7 FAIR VALUE HIERARCHY
Level 3 Investments held for trading
2020
£’000
2019
£’000
30
878
878
878
15
200
864
864
FAIR VALUE MEASUREMENTS
The Group holds quoted investments that are measured at fair value at the end of each reporting period
using the IFRS 7 fair value hierarchy as set out below.
Level 1 valued using quoted prices in active markets for identical assets.
Level 2 valued by reference to valuation techniques using observable inputs other than quoted prices
included within Level 1.
Level 3 valued by reference to valuation techniques using inputs that are not based on observable market
data.
The valuation techniques used by the Group are explained in the accounting policy note, “Investments held
for trading”.
Annual Report 2020
71
Notes To The Financial Statements
21.FINANCIAL INSTRUMENTS (continued)
FINANCIAL LIABILITIES AT AMORTISED COST
The IFRS 9 categories of financial liabilities included in the statement of financial position and the headings
in which they are included are as follows:
Trade and other payables
Borrowings
2020
£’000
3,700
920
2019
£’000
1,350
−
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash
flows of financial liabilities based on the earliest repayment date on which the Group can be required to
pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating
rate, the undiscounted amount is derived from the interest rate curves at the balance sheet date. The
contractual maturity is based on the earliest date on which the Group may be required to pay.
Less than
1 month
13
months
3 months
to 1 year
15
years
Over 5
years
£’000
£’000
£’000
£’000
£’000
2020
Interest bearing:
Borrowings
Non-interest bearing:
Trade and other payables
2019
Interest bearing:
Borrowings
Non-interest bearing:
Trade and other payables
−
−
−
−
−
339
581
934
−
1,350
−
−
−
2,766
−
−
−
−
−
−
As at 31 December 2020 the Group had net debt (defined as cash less borrowings) of £890,000 2019 net
cash of £15,000. The movement arose entirely through cash flows with the exception of £297,000 which
has been re-classified as non-current debt (see note 15.
72
Annual Report 2020
Notes To The Financial Statements
22. CONTINGENT LIABILITIES
OML 113 joint agreement
The Group recognises a liability in respect of its participation in the OML 113 Joint Operating Agreement. The
liability disclosed in these accounts is based on a reconciliation of the amounts owed under the operating
agreement entered into by the Group and other participators in the OML 113 operation. The reconciliation is
based on returns and reconciliations provided by the project’s operator, which references the Group’s share
of revenue received and costs incurred. It is understood that some of the partners disagreed with the
amounts shown in the reconciliation and so an audit is currently in progress to confirm the balances due by
the partners in respect of the joint operating agreement. At this stage it is not possible to estimate what
effect the result of the audit may have on the Group’s liability, but when the audit is concluded, possibly
within the next three months, it is possible that there may be a material change to the Group’s liability. It
remains the Directors expectation that the Group’s liability will be settled against the Group’s share of project
revenues such that the Group will experience no additional cash outflow.
23. RELATED PARTY TRANSACTIONS
The remuneration of the Directors, who are key management personnel of the Group, is set out in the report
on Directors’ Remuneration.
24. ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate controlling party.
25. POST PERIOD END EVENTS
‣ On 29 January 2021, the company announced that it had extended its strategic alliance with Trafigura
Pte Ltd for conditional financing of up to $120 million by twelve months.
‣ On 24 March 2021, the Company announced that it had raised approximately £1,220,000 of equity
issuing 28,710,250 ordinary shares at a price of 4.25 pence per share.
‣ On 8 April 2021, the Company announced that it had issued 443,627 ordinary shares to a participant
of the £200,000 loan facility announced on 27 April 2020 and the £200,000 loan facility announced
on 25 August 2020 to settle the £15,000 interest accrued on the loans. 208,333 ordinary shares were
issued at a price of 2.4 pence per share and 235,294 ordinary shares were issued at a price of 4.25
pence per share.
Annual Report 2020
73
Notes To The Financial Statements
25. POST PERIOD END EVENTS (continued)
‣ On 28 April 2021, the Company announce the completion of the Barracuda Field transaction
acquiring a 51% interest in KONH UK Ltd which holds a 70% interest in the rights, benefits and
obligations under the risk sharing agreement for the development of the large-scale Barracuda Field
in OML 141. As part of the consideration 5,657,912 ordinary shares were issued at a price of 7 pence
per share.
‣ On 4th May 2021, the Company announced that CEO Osa Okhomina purchased 480,446 ordinary
shares at 3.45 pence per share.
‣ On 20 May 2021, the company announced the disposal of its interest in Superdielectrics Ltd selling
188,778 shares at a price of £4.50 per share.
‣ On 22 June 2021, the Company announced that it had extended 2 loan agreements. £100,000 had
been extended to 31 December 2021, and £100,000 had been extended to 30 June 2022. 4,705,882
new warrants were issued in respect of the loan extension.
74
Annual Report 2020