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
BROKER
REGISTRARS
INDEPENDENT AUDITOR
FINANCIAL PR
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2
Annual Report 2021
WELCOME TO ADM ENERGY
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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 and also hold an
investment in the development of the Barracuda Field, an existing discovery asset in OML
141.
We are seeking to build on our existing asset base and target other investment opportunit-
ies across the West African region in the oil and gas sector with attractive risk reward pro-
files such as proven nature of reserves, level of historic investment, established infrastruc-
ture and route to early cash flow.
CONTENTS
Company Information
2021 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
Annual Report 2021
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Overview // Strategic Report // Governance // Financial Statements
2021 OVERVIEW
Investment Highlights
AJE FIELD, OML 113
‣ First full year of increased interest in the Aje Field, Nigeria (ADM increased its equity investment from 5%
to 9.2% in December 2020
‣ Total oil production in 2021 of 407,705 bbls and barrels of oil per day of 1,117 bopd (103 bopd net to
ADM
‣ Completed the 15th and 16th liftings at the Aje Field in April and October 2021 for a total of 457,379 bar-
rels with a net share of 49,099
BARRACUDA FIELD, OML 141
‣ Acquired an indirect interest in a Risk Sharing Agreement (“RSA”) for the development of the Barracuda
Field. Subsequently, commissioned a CPR a Competent Person’s Report (“CPR”) by Xodus on the Bar-
racuda Field
‣ Post-period announced the result of the CPR on the Barracuda prospect with a 2U P50 case, the
NPV10 is +$99mm with an IRR of 45%
DISPOSAL OF INTEREST
‣ Disposed of 188,778 shares in Superdielectrics Ltd (“Superdielectrics") for a total consideration of
£849,501, which provided a profit of £656,000 on ADM’s original investment
407 K+ bbls
1,117 bopd
TOTAL OIL PRODUCTION
BARRELS OF OIL PER DAY
IN 2021
IN 2021
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Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
Financial and Corporate Highlights
‣ Revenue increased by 125% to £1.8m (2020 £0.8m), reflecting a recovery in the oil price and ADM’s in-
creased profit interest in the Aje Field
‣ Loss after tax decreased 64% to £2.5m (2020 £6.9m loss)
‣ Completed an oversubscribed fundraising of £1,220,000 in March 2021, and raised an additional
£475,000 in November 2021
‣ Appointed Oliver Andrews, former Chief Investment Officer at the Africa Finance Corporation, as Non-
executive Chairman and Dr Babatunde Pearse, as Chief Engineer on the Aje Development to oversee
the next phase of Aje development
‣ Post period, in January 2022, the Company completed an equity fundraising of approximately £561,000
with Optima Resources Limited
£ 1.8 mln
REVENUE IN 2021
£1.695 mln
EQUITY FUNDRAISING
Annual Report 2021
5
Overview // Strategic Report // Governance // Financial Statements
Dear Stakeholders,
2021 was another year where the world economy had to adapt to Covid-19
and the disruptions it brought. Despite this, it is pleasing to report that the
Company made substantial progress in 2021 which included two liftings
from Aje, significantly increasing revenue, the acquisition of an indirect in-
terest in the Barracuda prospect, two fundraises and the strengthening of
the technical team.
With an established foothold in West Africa and a superior quality oil produ-
cing asset in offshore Nigeria, the Board considers ADM is well-positioned
as an oil and gas investing company with a growth strategy of adding value
to our current investment assets while targeting the acquisition of underval-
ued 2P reserves without the risks associated with high-cost exploration.
Global oil demand gradually revived in 2021 and the war in Ukraine along-
side a combination of other factors has heightened anxieties about global
supply shortages, pushing oil and gas prices higher again in 2022. While the
global shift to renewable energy accelerates, the full transition to a green
economy remains years away and as such oil and gas will maintain a vital
role in the world economy both now and into the future.
6
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
AJE FIELD
During the year, the 15th and 16th liftings were
completed at the Aje Field, the first liftings since
ADM consolidated its interest in Aje. Our belief and
confidence in the asset has been echoed by Petro-
Nor's decision to take a significant stake in the Aje
field, a strong endorsement of the potential of Aje
and the added value the development plans of the
partners can bring. PetroNor has extensive sector
experience in Upstream Oil and Gas exploration and
production that will prove invaluable and help accel-
erate development plans taking Aje to the next
phase of its development.
BARRACUDA
In March 2021, the Company acquired an indirect
interest in a Risk Sharing Agreement ("RSA") for the
development of the Barracuda Field. Located in
OML 141, the Barracuda Field is an existing discov-
ery and near-term production asset in the swamp/
shallow waters of the Niger Delta.
The Company commissioned a Competent Person’s
Report (“CPR”) which was completed in March 2022
and concluded that the prospect is considered pro-
spective and robust for development, with a 2U
P50 case, the NPV10 is +$99 million with an IRR of
45%. More exploratory work and analysis will be
required before an investment decision can be
taken but the CPR provides a solid foundation for
further evaluation.
As stated previously, legal proceedings are continu-
ing in respect of our interest in the Barracuda Field
and we continue to vigorously defend our position
as we await the outcome of the proceedings and
will update shareholders in due course.
We believe our investments provide the Company
with a good platform to grow shareholder value,
both through our existing investment portfolio and
as we search for other attractive opportunities.
FUNDRAISING AND ACCESS TO CAPITAL
ADM raised approximately £1.7 million in two fun-
draisings demonstrating investor support for our
growth strategy to build a multi-asset portfolio by
targeting projects with highly attractive risk-reward
profiles.
In May 2021, the Company completed the sale of a
sizeable portion of its holding in Superdielectrics for
£849,501, equating to a profit of £656,000, repres-
enting more than four times the Company’s original
investment.
We have a deep and expansive network including
strong relationships with sector powerhouses such
as Trafigura Pte Ltd. We are in regular discussions
with prospective financing partners regarding po-
tential new opportunities in which they would have
the option to participate. It is a great advantage for
the Company to have access to a strong network of
companies who can help provide capital to advance
attractive investments opportunities.
BOARD AND TECHNICAL TEAM CHANGES
I joined ADM as Chairman in August 2021 replacing
Peter Francis. In the time I have been in the role I
have been impressed with both the management
and technical teams’ level of expertise and com-
mitment to executing our growth strategy. I am ex-
cited to bring my experience and network across
Africa to add value to the board as we grow and
progress for the benefit of all our shareholders.
We have added high calibre individuals with industry
expertise and experience, including industry veter-
an Dr Babatunde Pearse appointed to the technical
team as Chief Engineer to oversee the next phase
of development at Aje.
LOOKING AHEAD
We have entered 2022 with an investment portfolio
that gives us a solid platform for value creation for
both existing and future potential investments. ADM
with its knowledge of the industry and region, ac-
cess to capital and extensive network, is in an ex-
cellent position to seek out investment opportunit-
ies in projects with attractive risk-reward profiles.
I am excited to assist with my experience and net-
work across Africa as we focus on building ADM for
the benefit of all our shareholders. I would like to
thank my fellow Board members and the manage-
ment team for their commitment and dedication to
ADM. I also want to thank our shareholders for their
continued support, and I am confident that 2022
will be an important year for ADM and our growth
plans.
OLIVER ANDREWS
NON-EXECUTIVE CHAIRMAN
22 June 2022
Annual Report 2021
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Overview // Strategic Report // Governance // Financial Statements
OPERATING REVIEW
AJE FIELD
2021 was an important year of progress for ADM
Energy. It marks the first full year since the Com-
pany consolidated its position in the Aje Field OML
113, expanding ADM’s profit interest from 5% to
9.5%. The Company announced the 15th and 16th
Liftings at the Aje Field for a total of 457,379 barrels
with a net share of 49,099.
For the full year, revenue increased by 125% to £1.8
million (2020 £0.8 million) reflecting the first two
liftings at the Aje Field since the Company in-
creased its interest in Aje alongside a recovery in oil
prices in 2021.
Alongside Aje, the Company entered 2021 with a
strategy to continue to pursue high-quality assets,
with attractive risk-reward profiles, and successfully
completed the acquisition of an indirect interest for
the large-scale Barracuda Field in OML 141.
ADM also welcomed Oliver Andrews as Non-exec-
utive Chairman and strengthened the team’s tech-
nical expertise with the appointment of industry
veteran Dr Babatunde Pearse as Chief Engineer on
the Aje Development.
The Aje Field on OML 113 offshore Nigeria is an oil
producing asset which is rich in gas and condens-
ate reserves. It is strategically located 24km off-
shore Lagos where it benefits from increasing local
energy demand, particularly for gas, which is
viewed as a replacement fuel for diesel and com-
mands a premium. The field is also within close
proximity to the West African Gas Pipeline which
presents a potential opportunity for gas monetisa-
tion in neighbouring countries such as Benin and
Togo.
OIL PRODUCTION:
2021
2020
Gross
407,705 bbls
698,649 bbls
1,117 bopd
1,909 bopd
Net
37,595 bbls
36,295 bbls
103 bopd
99.2 bopd
This is the first full year since the Company an-
nounced the completion of the transaction with EER
Colobos) Nigeria Limited (“EER”) in December 2020
benefitting from an increased 9.2% profit interest in
the field, nearly doubling our share of revenue, re-
serves and net production.
8
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
During the period, oil production continued from the
Aje Field (Aje-4 and Aje-5 at an average of 1,117
bopd (FY 2020 1,909. Total gross production
volume amounted to approximately 407,705 barrels
of oil. As stated previously, the drop in volume re-
flects the decision by the Joint Venture Partners
(“JV Partners”) to continue a more thorough and
extended period of maintenance on the Floating
Production Storage and Offloading (“FPSO”) while
oil prices were depressed at the beginning of the
year and due to limited gas handling capacity of the
FPSO.
The Company announced the 15th and 16th liftings
at the Aje Field in April and October 2021 for a total
of 457,379 barrels with a net share of 49,099. These
were the first liftings since the Company consolid-
ated its interest in the asset. The proceeds of the
liftings were applied against the project debt, con-
tributing to a reduction in the outstanding balance
and the JV Partners anticipate further liftings in
2022.
The JV Partners have assessed that the current
FPSO is not suitable for the long-term development
plans for OML113 and are progressing plans to re-
place the current FPSO to increase capacity. As a
result, the JV Partners declined to commit to a long-
term extension of the current FPSO contract and
the current FPSO operator will stop production in
preparation for demobilisation from the field. This
temporary suspension is a necessary step to ensure
future production is not limited by FPSO capacity
and production issues. The JV Partners are working
towards securing an optimum FPSO that will match
plans to significantly increase production from the
redevelopment of the Aje field and the Company will
update the market in due course.
A crucial step forward in the future development of
Aje came post period in January 2022 when Panoro
Energy ASA “Panoro”) and PetroNor E&P Limited
(“PetroNor”) announced that the transaction for
Panoro to sell 10% of its ownership to PetroNor (the
“Transaction”) had received all government ap-
provals. PetroNor and Panoro are progressing the
final stages and have agreed a long-stop date to
complete the transaction at 30 June 2022. Petro-
Nor’s decision to take a significant stake in the Aje
field is a strong endorsement of the potential of the
asset.
The expected completion of the Transaction will
accelerate the JV Partners Final Investment De-
cision on the long-term field development plans for
the Aje Field and PetroNor’s experience in develop-
ment and production will play a key role in the next
phase of Aje’s development. The Field Development
Plan which includes the potential drilling of three
new wells, could significantly increase production of
oil and gas liquids at a time nations around the
world are seeking new sources of oil and gas. Chief
Engineer on the Aje Development, Dr Babatunde
Pearse, who has an IOC background and extensive
industry experience will lead the planning, develop-
ment and oversee Front end Engineering Design
(“FEED”) studies to support the Final Investment
Decision.
BARRACUDA
In April 2021, ADM completed the acquisition of an
indirect interest in a Risk Sharing Agreement (“RSA”)
for the development of the Barracuda Field. Loc-
ated in OML 141, the Barracuda Field is an existing
discovery asset which covers 103km2 in the
swamp/shallow waters of the Niger Delta.
In May 2021, the Company commissioned Xodus
Group Limited ("Xodus"), an independent, interna-
tional energy consultancy, to prepare a CPR on the
field which was completed in March 2022. Xodus
calculated gross, unrisked Prospective Resources
for the RSA using standard geological and engineer-
ing approaches applied to the data made available
by ADM.
The CPR demonstrated the prospect of Barracuda
as prospective and robust for development, assum-
ing at least 70mmbbl Stock tank oil initially in place
(“STOIIP”) is discovered, with a 2U P50 case, the
NPV10 is +$99 million with an IRR of 45%.
The findings from the CPR provide a solid founda-
tion to continue towards the next stage of technical
review which will include subsurface analysis and
gaining more analogue data from neighbouring
fields to better understand the trap mechanisms.
The Company will use the findings from the CPR
and any additional work required to further appraise
the asset and make an investment decision.
INTERIM INJUNCTION
As announced in November 2021, K.O.N.H. UK Ltd
("KONH") was notified by Noble Hill-Network Lim-
ited ("NHNL”) of a dispute regarding its ownership in
NHNL and therefore its interest in the Barracuda
Field in OML 141. ADM and its legal advisers con-
sider that the dispute brought by NHNL is without
merit and ADM confirms there has been no change
in its position as the majority shareholder in KONH
and the subsequent 70 per cent. indirect interest in
NHNL.
Annual Report 2021
9
Overview // Strategic Report // Governance // Financial Statements
The Company and KONH obtained an interim in-
junction at the Federal High Court of Nigeria, Lagos
("Court") restraining NHNL from selling, disposing,
divesting or tampering with the 70% shareholding
interest of KONH in NHNL to third-party investors or
in any other manner whatsoever.
sideration of £849,501, a profit of £656,000 and an
increase in value of approximately 340% on ADM’s
original investment of £199,875 in 2017 and 2018.
The proceeds of the sale, together with the above
fundraises, have been used to support our growth
strategy.
NHNL applied to the court to set aside the interim
injunction order. The Court pronounced NHNL's ap-
plication as lacking in merit and the application was
dismissed.
The Court has since adjourned this matter until 30
June 2022 and the interim injunction remains in
place.
CORPORATE
The Company has sought to appoint high calibre
individuals who will propel the business forward
including Oliver Andrews as the new Non-executive
Chairman. He replaces Peter Francis who departed
due to personal circumstances, and whose contri-
bution to the business was noted and for which the
board noted its appreciation. Mr Andrews is the
former Chief Investment Officer at the Africa Fin-
ance Corporation, one of the largest investment
funds in Africa. Over the last 35 years, he has over-
seen investments of approximately US$10 billion
and originated investments deals in natural re-
sources and infrastructure across the continent,
worth US$100 billion.
ADM continues to bolster its technical team to ad-
vance the Company’s existing assets and evaluate
new prospects. Dr Babatunde Pearse was appoin-
ted as Chief Engineer on the Aje Development to
oversee the next phase of development at Aje and
overseeing the FEED “Front End Engineering Stud-
ies”). Dr Pearse is an industry veteran with an ex-
tensive background with international Oil Compan-
ies (“IOC”s).
FUNDING AND DISPOSALS
The Company raised a total of approximately £1.7
million in two fundraisings in 2021. In March 2021,
ADM completed an oversubscribed fundraising rais-
ing £1,220,000 before expenses and a further
£475,000 raised in November 2021, including a
subscription from Directors. In addition, post period,
the Company announced an equity fundraise of
approximately £561,000 with Optima Resources
Limited.
In May 2021, the Company completed the sale of
188,778 shares in Superdielectrics for a total con-
OUTLOOK
We consider that the progress the Company has
made in 2021 provides an excellent platform for
growth. In Aje, ADM has an interest in a high-quality
asset with scope for significant increase in produc-
tion. PetroNor coming on board is a great endorse-
ment of Aje’s potential and if, as is expected, Petro-
Nor completes the formalities of the acquisition, it
adds a heavyweight partner that will be keen to ex-
tract further value from the asset. It will enable the
partners to progress the Field Development Plan
and significantly increase production at a time when
new supplies of oil and gas are increasingly needed
around the world.
Alongside Aje, Barracuda took a major step forward
with the completed CPR which showed Barracuda
has the potential to be prospective for develop-
ment. In 2022, we will continue further work and
analysis to help us further understand the asset’s
potential before making an investment decision.
With Aje and Barracuda progressing, there remain
opportunities for ADM, with its expertise, deep net-
work and access to capital with strong relationships
with majors such as Trafigura, to add additional
high-quality assets to its investment portfolio. We
consider we are well placed to take advantage of a
market whereby International Oil Companies are in
the process of extensive divestment programmes
and, in line with our strategy, ADM will continue to
seek out assets in West Africa at attractive valu-
ations with substantial upside for shareholders. In
addition, and as part of its investment strategy,
ADM remains open to potential renewable energy
investments, primarily in Europe, if there is an op-
portunity to bring additional value to shareholders.
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:
10
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
KEY RISKS AND UNCERTAINTIES
GROUP STATISTICS
As at 31
December
2021
As at 31
December
2020
Net asset value
£10,986,000 £11,002,000
Net asset value – fully diluted per
share
5.2p
8.5p
Early stage investments in the natural resources
sector carry an elevated level of risk and uncer-
tainty, 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 un-
quoted 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 thor-
ough 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 22 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 devel-
opments, 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
previously low oil price environment, we have taken
appropriate measures with a significant cost reduc-
tion 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 posi-
tioned to execute its growth investment strategy,
supported by a solid 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 de-
cision in the long term
‣ Act fairly between the members of the Com-
pany
‣ Maintain a reputation for high standards of
business conduct
‣ Consider the interests of the Company’s em-
ployees
‣ Foster the Company’s relationships with suppli-
ers, customers and others and
‣ Consider the impact of the Company’s opera-
tions 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 activ-
ities, 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 direct-
ors. The Board recognises that the Company’s em-
ployees 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 li-
cence. The Company acknowledges the import-
ance 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 com-
munity and environment is set out in “Our Sustain-
able Approach” on page 18.
Annual Report 2021
11
Overview // Strategic Report // Governance // Financial Statements
GOING CONCERN
At 31 December 2021, the Group recorded a loss for the year of £2,540,000
and had net current liabilities of £1,445,000, after allowing for cash balances
of £110,000. During the period, the Group raised additional equity of £1.7 mil-
lion in two fundraisings. In March 2021, the Group raised £1,220,000 and in
November 2021, the Group raised £475,000. Post period, in January 2022,
the Company announced an equity fundraising of approximately £561,000
with Optima Resources Limited. In May 2021 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 con-
sideration the level and timing of the Group’s working capital requirements
(which takes into account recent reductions in costs and control of discre-
tionary spending to preserve cash flow) and has also considered the likeli-
hood 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 Dir-
ectors 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 real-
istic alternative but to halt operations and prepare its financial statements on
a non-going concern basis.
ON BEHALF OF THE BOARD,
OSAMEDE OKHOMINA
DIRECTOR
22 June 2022
12
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
The financial results of the Group improved markedly on last year as they be-
nefitted from an increased profit interest in the Aje Field, and the oil price re-
covered in the context of a somewhat abating Covid crisis. Also, the Group
successfully completed the acquisition of a controlling indirect interest in the
Risk Sharing Agreement (RSA for the development of the large-scale Bar-
racuda Field in OML 141.
REVENUE AND PROFIT
For the year ended 31 December 2021, the Group’s revenue increased by
125% to £1.8 million (2020 £0.8 million). The higher revenue reflects the bet-
ter oil price environment for the two liftings which were completed in April and
October 2021 for a total gross production of 457,379 bbls with a net share of
49,099 bbls for ADM.
Operating costs increased by 36% to £1.9 million (2020 £1.4 million) as cer-
tain temporary cost-cutting initiatives taken by the Aje partnership in 2020 to
mitigate the impact of low oil prices, were reversed as a response to a much
better commodity pricing environment.
Decommissioning provision amounted to £1.3 million (2020 £1 million).
Depreciation & amortisation expense decreased by 45% to £0.05 million
(2020 £0.09 million) reflecting the lower value of our interest in Aje after an
impairment was recognised in 2020 to reflect the recent Petronor/Panoro
transaction.
Administrative expenses decreased by 12% to £2.3 million (2020 £2.6 million)
remaining at a relatively high level and reflecting high M&A evaluation activity,
as well as the costs related to the completion of our acquisition of a con-
trolling indirect interest in the Barracuda Field RSA.
Finance costs decreased by 16% to £0.06 million (2020 £0.07 million).
Annual Report 2021
13
Overview // Strategic Report // Governance // Financial Statements
As a result, the loss after taxation decreased 64% to £2.5 million (2020 £6.9
million loss). The Directors do not propose a dividend (2020 £nil).
CASH FLOWS AND LIQUIDITY
After adjusting for the conversion of warrants issued in settlement of fees and
working capital movements, cash flow loss from operating activities increased
by 40% to £2.1 million (2020 £1.5 million loss).
The £2.7 million owed to the Aje JV has this year been accounted for in non-
current liabilities rather than in current liabilities. The liability will be repaid in
due time out of Aje production cash flows.
During the period, the Group raised additional equity of £1.7 million in two
fundraisings. In March 2021, the Group raised £1,220,000 of equity for general
working capital purposes. In November 2021, the Group raised £475,000 of
equity also for general working capital purposes.
As of 31 December 2021, the Group had cash and cash equivalents of
£110,000 31 December 2020 £30,000.
Post period, in January 2022, ADM announced an equity fundraising of ap-
proximately £561,000 with Optima Resources Limited.
OUTLOOK
Following government approvals received in January 2022 by Panoro to sell
its interest in the OML 113 offshore block to PetroNor, the Aje partnership are
focused on progressing this project which remains a significant source of po-
tential value creation for all partners and for the Group in particular.
The Group remains committed to pursuing other value-accretive acquisitions
focused on producing and near-term production assets. To that effect the
team is reviewing several such opportunities and will keep the market in-
formed of any development.
LIONEL THEROND
CFO
22 June 2022
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BOARD OF DIRECTORS
OLIVER ANDREWS
Non-Executive Chairman
Oliver has over 35 years’ experience in infrastructure development, invest-
ing, public-private partnerships and strategic advisory work such as ad-
vising and partnering with governments, regional and international corpora-
tions and development finance institutions. During his career, he has over-
seen 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 Ex-
ecutive Director and Chief Investment Officer at the Africa Finance Corpor-
ation, one of the biggest investors in natural resources and infrastructure
solutions in Africa, where he oversaw the growth of assets under manage-
ment 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 found-
ing 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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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-ex-
ecutive 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 Re-
sources 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 Busi-
ness 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 ca-
reer, Lord Bellingham has held several non-executive roles on AIM compan-
ies 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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INVESTING POLICY
The Company will seek to invest in opportunities within the natural resources
sector, the oil services, power and energy sectors and in technology oppor-
tunities related to these sectors that the Directors believe either are of stra-
tegic value or represent a significant value opportunity. The Company is pre-
pared to take an active role in its investments where it is deemed to be ap-
propriate.
The Directors plan to adopt a flexible approach, both as to the form and sub-
ject of the Company’s investments. The investments may be in quoted and
unquoted companies. This includes making investments in other quoted in-
vestment 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 seek-
ing a public quotation and candidates for reverse transactions into quoted
investment companies. The Company may invest in these types of opportun-
ities through acquisitions, partnerships, joint venture arrangements, as fin-
ance 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 Com-
pany 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 con-
sider these on a case-by-case basis and seek to maximise value for share-
holders. 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 opin-
ion.
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OUR SUSTAINABLE APPROACH
ADM Energy is committed to the highest standards of corporate social re-
sponsibility in its investing policy. Working alongside its partners, the Com-
pany 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 Govern-
ment 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 es-
tablished communities and environments.
The Company is conscious of the impact to the environment and local com-
munities that oil and gas activities may have and aims to minimise and con-
stantly reduce these effects. The projects in which ADM invests comply with
all existing laws, regulations and permits. By making continuous improve-
ments, 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, pol-
lution prevention and human health. The Company’s actions are characterised
by respect for the cultures of the regions in which it operates. ADM is com-
mitted to maintaining an open dialogue over the environmental aspects of its
investments and the operations of the partners in these projects with all
stakeholders.
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DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The Directors present their annual report on the affairs of the Group, together with the financial statements for
the year ended 31 December 2022.
Certain information required by the Companies Act 2006 relating to the information to be provided in the Dir-
ectors’ Report is set out in the Strategic Report and includes principal activity, future developments and prin-
cipal 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
Dr Stefan Liebing
Peter Francis
Resigned 2 August 2021
Directors’ Interests
Set out below are the Directors’ beneficial holdings of ordinary shares in the Company as at 31 December
2021. Their interests in the Company’s share warrants are included in the Report on Directors’ Remuneration.
Name of director
Oliver Andrews
Osamede Okhomina
Richard Carter
Dr Stefan Liebing
Lord Bellingham
Ordinary shares of
1p each
Number
Percentage
of capital
%
6,666,667
6,006,159
2,431,296
655,972
353,031
3.26%
2.94%
1.19%
0.32%
0.17%
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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 16 May 2022 were as follows:
Name of shareholder
Optima Resources Holding Ltd
Hessia Group Limited
Monecor (London) Ltd
Align Research Limited & related parties – RS & CA Jennings
10,904,031
Ordinary shares of
1p each
Number
Percentage
of capital
%
51,000,000
36,449,303
17,618,095
19.96%
14.27%
6.90%
4.27%
Post Year End Events
On 21 January 2022, the Company announced that it had raised approximately £561,000 of equity issuing
51,000,000 new ordinary shares at a price of 1.11 pence per share to Optima Resources Holding Limited. In
connection with the issue the Company has issued 15.3 million warrants to Optima Resources to subscribe for
ordinary shares at an exercise price of 4.5 pence per share with an exercise period of two years from the date
of Admission.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the report of the directors and the financial statements in accord-
ance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial
year. The Directors are required by the AIM Rules of the London Stock Exchange to prepare group financial
statements in accordance with UK-adopted international accounting standards (“IFRS"). 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 fin-
ancial statements, the Directors are required to:
‣ select suitable accounting policies and then apply them consistently;
‣ make judgments and accounting estimates that are reasonable and prudent;
‣ state whether applicable IFRSs have been followed, subject to any material departures disclosed and ex-
‣ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
plained in the financial statements; and
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.
In the case of each person who was a director at the time, this report was approved:
‣ so far as that director is aware there is no relevant audit information of which the Group’s auditor is un-
aware; and
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‣ 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 in-
cluded on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemina-
tion of financial statements may differ from legislation in other jurisdictions.
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 ap-
‣ explain how the Company complies with that code, and where it departs from its chosen corporate gov-
ply; and
ernance 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.
Auditors
Kreston Reeves LLP were appointed as the statutory auditors during the year, and they have expressed their
willingness to continue in office, and a resolution to reappoint them will be proposed at the forthcoming Annu-
al General Meeting.
ON BEHALF OF THE BOARD,
OSAMEDE OKHOMINA
DIRECTOR
22 June 2022
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CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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 gov-
ernance, and how the Board and its Committees operate.
The corporate governance framework which the Company operates, including board leadership and effect-
iveness, board remuneration, and internal control is based upon practices which the Board believes are pro-
portional 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 ex-
planation 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. Cur-
rently, the Company’s principal investment is in the Nigerian offshore licence OML 113 and to date the Com-
pany 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 share-
holders will be delivered principally through capital growth.
The Board recognises that a challenge of the natural resource sector is the critical time and financial invest-
ment 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 effective communication and having constructive dialogue with its
shareholders. Shareholders 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.ad-
menergyplc.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.
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• TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES AND THEIR IM-
PLICATIONS 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 de-
velops the OML 113 asset and its portfolio of other investments. Accordingly, ensuring that the Company con-
tinually 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 de-
tails 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 annu-
ally by the Board. These policies cover matters such as share dealing and insider legislation. The Board cur-
rently 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 warrant-
ing 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 the Strategic Report on pages 812, 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 1516. Execut-
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ive 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 ro-
tation 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 organisa-
tions 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 EXPERI-
ENCE, 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
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 1516.
• 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 independ-
ence
• 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 foremost 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 distrib-
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uted 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 manage-
ment 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 ambitious
standards throughout the group. He leads and chairs the Board, ensuring that committees are properly struc-
tured 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.
The Executive Directors are responsible for implementing and delivering the strategy and operational de-
cisions 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 chal-
lenge to the executive directors and ensure that the group is operating within the governance and risk frame-
work 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 Ac-
counts, full-year and half-year announcements, the AGM and one-to-one meetings with large existing or po-
tential 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.
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CHAIRMAN’S GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
The Board is committed, where practicable, to developing and applying exacting standards of corporate gov-
ernance appropriate to the Company’s size and stage of development. The Board seeks to apply where ap-
propriate 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 explan-
ation 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 Dir-
ectors’ 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 re-
corded. 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 ad-
dressed 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.
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Board Committees
REMUNERATION COMMITTEE
The Remuneration Committee consists of Oliver Andrews (Committee Chairman), Manuel Lamboley and Dr
Stefan. It is responsible for reviewing the performance of the senior executives and for determining their levels
of remuneration. The Committee makes recommendations to the Board, within agreed terms of reference re-
garding 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 2021. This report sets out the activities of the Remuneration Committee during 2021.
The Committee met twice during the year to determine the remuneration arrangements of the Directors and
senior employees.
REMUNERATION POLICY
achieve its objectives; and
The Committee aims to ensure that total remuneration is set at an appropriate level for the Group and its op-
erations. 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
‣ 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), Manuel Lamboley and Dr Stefan. 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 re-
viewing 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 2021. This report sets out the activities of the Audit Committee during 2021.
The Audit Committee is governed by terms of reference which are agreed by the Board and subject to annual
review.
Annual Report 2021
27
Overview // Strategic Report // Governance // Financial Statements
the Group;
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
‣ Receive and review reports from the Group’s management and auditors relating to the interim and annual
‣ 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 audit-
accounts;
ors.
Areas of focus during 2021
The Committee met three times in 2021 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 judge-
ments 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 con-
trols 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 the external auditors and then approves the scope of work to be un-
dertaken 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 val-
ues 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, accur-
ate, 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 de-
ter wrongdoing.
OLIVER ANDREWS
NON-EXECUTIVE CHAIRMAN
22 June 2022
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REPORT ON DIRECTORS’ REMUNERATION
FOR THE PERIOD ENDED 31 DECEMBER 2021
REMUNERATION
The remuneration of the Directors has been fixed by the Board as a whole. The Board seeks to provide appro-
priate reward for the skill and time commitment required 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 27.
DIRECTORS’ EMOLUMENTS
Details of the remuneration package of each Director for the year are set out below:
Director
Oliver Andrews (appointed 2 Aug 2021
Osamede Okhomina
Richard Carter
Manuel Lamboley
Lord Bellingham
Dr Stefan Liebing
Directors who left during year:
Peter Francis (resigned 2 Aug 2021
Sergio Lopez
Stefan Olivier
2021
2021
2021
2020
Fees and
emoluments
Pension
contributions
Total
remuneration
Total
remuneration
£’000
25
384
216
37
30
28
20
−
−
£’000
£’000
−
25
20
−
−
−
−
−
−
25
409
236
37
30
28
20
−
−
−
275
208
30
13
13
50
47
10
740
45
785
646
PENSIONS
Pension contributions of £45,000 were paid in respect of the directors for the year ended 31 December 2021
2020 £59,000.
ON BEHALF OF THE BOARD,
OLIVER ANDREWS
NON-EXECUTIVE CHAIRMAN
22 June 2022
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REPORT OF THE INDEPENDENT AUDITOR TO THE
MEMBERS OF ADM ENERGY PLC
FOR THE PERIOD ENDED 31 DECEMBER 2021
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 2021 which comprise the consolidated income statement, consolid-
ated and company statements of financial position, consolidated and company statements of changes in
equity, consolidated and company statements of cashflow and notes to the financial statements, including a
summary of significant accounting policies. The financial reporting framework that has been applied in their
preparation of the group financial statements is applicable law and UK adopted international accounting
standards.
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
2021 and of the Group’s loss for the year then ended;
‣ have been properly prepared in accordance with UK adopted international accounting standards; 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 applic-
able 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.
Material Uncertainty Related to Going Concern
We draw attention to note 2 in the financial statements, which discloses that the Group continues to require
additional funding to meet its liabilities as they fall due, this is likely to continue to be the case for a period of at
least 12 months from the date of the approval of these financial statements. 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 Group’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. This conclusion is reached based on
the following procedures, we have:
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‣ Evaluated the design and implementation of key internal controls over management’s assessment of going
concern, considering in detail the rationale provided and whether this was consistent with our understand-
ing as well as audit evidence obtained;
‣ considered the key financial data of the group and company at year end and assessed financial the finan-
cial headroom as well as ability to obtain additional financing. This includes terms agreed for additional fin-
ancing of up to £2m via a convertible loan issue;
‣ considered specifically the willingness and ability of shareholders to continue to provide equity finance to
the business based on historic track record of support, capital raises after the balance sheet date and the
results of recent shareholder general meetings;
‣ considered the accuracy of forecasts produced by management by reference to key assumptions made as
well as the historical accuracy of forecasts previously prepared by management, taking into account vari-
ances that arose;
‣ considered the impact of a range of reasonable sensitivities on the forecast headroom;
‣ Considered the trends of key commodity prices in the financial year and in the period up to the date of the
approval of these financial statements.
An Overview of the Scope of Our Audit
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion
on the financial statements as a whole, taking into account the structure of the Group and the parent com-
pany, the accounting processes and controls, and the industry in which they operate.
Our scoping considerations for the Group audit were based both on financial information and risk. The below
table summarises for the parent company, and its subsidiaries, in terms of the level of assurance gained:
Group component
ADM Energy PLC
P R Oil & Gas Nigeria Limited
ADM Asset Holdings Limited
ADM Energy Services Limited
ADM 113 Limited
Geo Estratos MXOil, SAPI de CV
K.O.N.H. UK Limited
Coverage Overview
Level of assurance
Full statutory audit
Substantial audit procedures
Limited assurance review
Limited assurance review
Limited assurance review
Limited assurance review
Limited assurance review
Group revenue (£’000s)
Group profit/(loss) before tax
(£’000s)
Group net assets (£’000s)
Totals at 31 December 2021:
Full statutory audit
Limited procedures
£1,751
£1,751
£Nil
£2,540
£2,540
£Nil
£10,986
£10,986
£Nil
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Our Application of Materiality
Group financial statements
Parent company financial state-
ments
Materiality
£215,300
£214,000
Basis for determining materiality
2% of net assets
Capped below group materiality
Rationale for benchmark applied
The group's principal activity of that of an
exploration and drilling operations. To this
end the business is highly asset focused.
Therefore, a benchmark for materiality of
the NA's of the group is considered to be
appropriate.
The parent company materiality has
been capped at below group material-
ity. This was to address the aggrega-
tion risk in the group audit.
Performance materiality
£161,500
£160,500
Basis for determining performance ma-
teriality
Rationale for performance materiality
applied
75% of materiality
Capped below group materiality
On the basis of our risk assessments,
together with our assessment of the
Group’s overall control environment, our
judgement was that performance materi-
ality was 75% of our planning materiality.
In assessing the appropriate level, we
consider the nature, the number and im-
pact of the audit differences identified in
the previous year’s audit by the previous
auditors.
The parent company performance
materiality has been capped at below
group performance materiality. This
was to address the aggregation risk in
the group audit.
Triviality threshold
£10,800
£10,700
Basis for determining triviality threshold
5% of materiality
Capped below group materiality
We reported all audit differences found in excess of our triviality threshold of £10,800 to the directors and the
management board.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements. In particular, we looked at where the directors made subjective judgements, for ex-
ample in respect of significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the directors that represented
a risk of material misstatement due to fraud.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a com-
plete list of all risks identified by our audit.
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REVENUE RECOGNITION
Significance and nature of key risk
How our audit addressed the key risk
The Group had one main source of revenue dur-
ing the year, this being the investment returns
from its share in the OML 113 License. The under-
lying asset being a stake in the Aje oil and gas
field in Nigeria.
We have focused on this income stream due to
the potential for material misstatement of reven-
ue whether caused by fraud or error.
The group’s revenue share is outlined in the Joint
Operating Agreement, the underlying revenues
being generated from the sale of crude oil within
the oil and gas field.
Given that revenues arise from the OML 133 license under the joint operating
agreement, there is risk of calculation errors which may result in recorded
revenue being material misstated.
We have obtained reconciliations produced by the asset’s operator directly
from this third party and confirmed the group’s stated share to underlying
signed contracts. The independence and competence of the operator was
also assessed along with their control environment in place for the produc-
tion of accurate financial reports for partners in the OML 113 License.
We have specifically considered revenue recognition and cut-off in line with
the requirements of IFRS 15.
We have further assessed the systems and controls in place around the rev-
enue cycle, implemented by the group themselves, to ensure that these are
functioning as designed.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of revenue recognised in the financial statements.
VALUATION/IMPAIRMENT OF INTANGIBLE ASSETS
Significance and nature of key risk
How our audit addressed the key risk
Intangible assets relate to the Group’s capitalised
development costs and proportionate interest in
the production assets covered under the joint
operating agreement.
We have closely examined the nature of items capitalised to ensure that
these meet the definition of intangible assets under IAS 38. This included
agreement to sale and purchase agreements as well as other supporting
evidence.
Due to the recognition requirements under IAS 38
there is inherent management judgement in the
treatment of these as assets of the group rather
than expenses.
We have obtained management’s assessment of the impairment of intan-
gibles. In analysing this we have considered external factors, such as the
consideration received for transfer of interest in the license between other
partners, in order to gain evidence of potential impairment in the value of the
group’s holding – which is effectively represented in the financial statements
by this intangible.
We have considered the appropriateness of the valuation model used and
agree this is reasonable given the nature of the underlying asset that these
development costs relate to.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of intangible asset values recognised in the financial statements.
VALUATION OF LIABILITIES IN P R OIL & GAS NIGERIA LIMITED
Significance and nature of key risk
How our audit addressed the key risk
There are cost sharing obligations relating to the
group’s interest in the OML 133 License, as spe-
cified in the joint operating agreement.
In line with our auditing of revenue recognition we have obtained reconcili-
ations produced by the asset’s operator directly from this third party and
confirmed the group’s stated share to underlying signed contracts.
These liabilities have increased with the acquisi-
tion of additional interest in the OML 113 license
by the group in recent years.
The independence and competence of the operating was also assessed
along with their control environment in place for the production of accurate
financial reports for partners in the OML 113 License.
There is a risk that expense share reported to the
group to be accrued for is materiality under-
stated.
We have confirmed that the specific audit of the operator’s accounting for
project costs was concluded in the financial year and that the results of this
did not indicate increased risk of material misstatement of the group’s share
of operating liabilities.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of liabilities relating to OML 113 license operations recognised in the financial
statements. The audit of the operator was concluded in the year with no findings made that gave rise to material uncertainty over
the accuracy of information being produced.
Annual Report 2021
33
Overview // Strategic Report // Governance // Financial Statements
Other Information
The directors are responsible for the other information. The other information comprises the information in-
cluded in the annual report, other than the financial statements and our auditor 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 ma-
terial 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.
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
‣ the strategic report and the directors’ report have been prepared in accordance with applicable legal re-
financial statements are prepared is consistent with the financial statements; and
quirements.
Matters on Which We Are Required to Report by Exception
In the light of our knowledge and understanding of the Group and parent company and its environment ob-
tained 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:
have not been received from branches not visited by us; or
‣ adequate accounting records have not been kept by the parent company, or returns adequate for our audit
‣ 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 20, the directors are re-
sponsible 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 finan-
cial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and parent com-
pany’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 parent
company or to cease operations, or have no realistic alternative but to do so.
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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.
CAPABILITY OF THE AUDIT IN DETECTING IRREGULARITIES, INCLUDING FRAUD
Based on our understanding of the group and industry, and through discussion with the directors and other
management (as required by auditing standards), we identified that the principal risks of non-compliance with
laws and regulations related to health and safety, anti-bribery and employment law. 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. We communicated identified laws and regulations throughout our team and remained
alert to any indications of non-compliance throughout the audit. 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 increase reven-
ue or reduce expenditure, management bias in accounting estimates and judgemental areas of the financial
statements such as the valuation of investment properties and mining reserve and development asset. Audit
procedures performed by the group engagement team included:
‣ Detailed discussions were held with management to identify any known or suspected instances of non-
‣ Identifying and assessing the design effectiveness of controls that management has in place to prevent
‣ Challenging assumptions and judgements made by management in its significant accounting estimates,
including assessing the capabilities of the property valuers and discussing with the valuers how their valu-
ations were calculated and the data and assumptions they have used to calculate these.
compliance with laws and regulations.
and detect fraud.
party transactions, that may indicate risks of material misstatement due to fraud.
‣ Performing analytical procedures to identify any unusual or unexpected relationships, including related
‣ Confirmation of related parties with management, and review of transactions throughout the period to
identify any previously undisclosed transactions with related parties outside the normal course of busi-
ness.
evant tax and regulatory authorities.
‣ Reading minutes of meetings of those charged with governance and reviewing correspondence with rel-
‣ Review of significant and unusual transactions and evaluation of the underlying financial rationale support-
‣ The cashbook used to create the initial financial information with respect to ADM Energy PLC and P R Oil &
Gas Nigeria Limited was reviewed to ensure no entries in the cash book indicated fraudulent activity my
management.
ing the transactions.
There are inherent limitations in the audit procedures described above and the further removed non-compli-
ance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
As part of an audit in accordance with ISAs (UK, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
‣ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suf-
Annual Report 2021
35
Overview // Strategic Report // Governance // Financial Statements
ficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, in-
tentional omissions, misrepresentations, or the override of internal control.
‣ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
and related disclosures made by the directors.
‣ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
‣ Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or condi-
tions that may cast significant doubt on the Group’s or the parent company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modi-
fy our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group or the parent company to cease to con-
tinue as a going concern.
‣ Evaluate the overall presentation, structure and content of the financial statements, including the disclos-
ures, and whether the financial statements represent the underlying transactions and events in a manner
that achieves fair presentation.
‣ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are respons-
ible for the direction, supervision and performance of the Group audit. We remain solely responsible for our
audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
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 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.
Anne Dwyer BSc(Hons) FCA Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date: 22 June 2022
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GROUP INCOME STATEMENT AND STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
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
Note
2021
£’000
3
4
5
7
8
1,751
1,895
2,340
−
−
2,484
−
56
2,540
−
2,540
141
2,399
1.6)p
2020
£’000
799
(1,423)
(2,616)
(4,628)
353
(7,515)
678
67
6,904
−
6,904
233
7,137
8.7)p
Annual Report 2021
37
Overview // Strategic Report // Governance // Financial Statements
GROUP AND COMPANY STATEMENTS OF
FINANCIAL POSITION
AS AT 31 DECEMBER 2021
GROUP
COMPANY
Notes
2021
£’000
2020
£’000
2021
£’000
2020
£’000
NONCURRENT ASSETS
Intangible assets
Investment in subsidiaries
Fixed asset investments
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
Other payables
Decommissioning provision
9
10
11
12
13
14
15
16
17
17
17
18
16,149
16,007
−
−
−
576
−
−
12,335
12,316
576
−
16,725
16,007
12,911
12,316
28
33
130
110
301
1,534
212
1,746
878
32
109
30
1,049
4,206
235
4,441
28
−
130
109
267
1,515
212
1,727
1,445
3,392
1,460
−
247
2,783
1,264
4,294
284
297
−
1,032
1,613
−
247
−
−
247
581
878
−
109
30
1,017
1,429
235
1,664
647
284
297
−
−
NET ASSETS
10,986
11,002
11,204
11,088
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Overview // Strategic Report // Governance // Financial Statements
EQUITY
Share capital
Share premium
Other reserves
Currency translation reserve
Retained deficit
19
19
20
10,267
9,450
10,267
9,450
38,014
36,591
38,014
36,591
960
709
817
850
960
−
817
−
37,546
35,006
38,037
35,770
Equity attributable to owners of the Company and total equity
10,986
11,002
11,204
11,088
The financial statements were approved by the Board and ready for issue on 22 June 2022.
Osa Okhomina
Director
Annual Report 2021
39
Overview // Strategic Report // Governance // Financial Statements
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share
capital
Share
premium
Exchange
translation
reserve
Other
reserves
Retained
deficit
Total
equity
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2020
Loss for the year
Exchange translation movement
Total comprehensive expense for
the year
8,817
34,012
−
−
−
−
−
−
Issue of new shares
633
2,544
Share issue costs
Warrants issued in settlement of
fees
Warrants exercised
Issue of convertible loans
−
−
−
−
21
−
56
−
(617)
−
233
233
−
−
−
−
−
870
(28,152)
14,930
−
−
−
134
−
170
106
17
6,904
6,904
−
233
6,904
7,137
−
−
−
50
−
3,043
21
170
−
17
At 31 December 2020
9,450
36,591
850
817
35,006
11,002
Loss for the year
Exchange translation movement
Total comprehensive expense for
the year
Issue of new shares
Share issue costs
Issue of convertible loans
Warrants issued in settlement of
fees
−
−
−
817
−
−
−
−
−
−
1,517
94
−
−
−
141
141
−
−
−
−
−
−
−
−
27
2
114
2,540
2,540
−
141
2,540
2,399
−
−
−
−
2,334
67
2
114
At 31 December 2021
10,267
38,014
709
960
37,546
10,986
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share
capital
£’000
Share
premium
Other
reserves
Retained
deficit
£’000
£’000
£’000
Total
equity
£’000
At 1 January 2020
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 2020
9,450
36,591
817
35,770
11,088
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
−
817
−
−
−
−
1,517
94
−
−
−
−
27
2
114
2,267
2,267
−
−
−
−
2,334
67
2
114
At 31 December 2021
10,267
38,014
960
38,037
11,204
Annual Report 2021
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GROUP AND COMPANY STATEMENTS OF CASH
FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
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
Decommissioning provision
GROUP
COMPANY
Note
2021
£’000
2020
£’000
2021
£’000
2020
£’000
2,540
6,904
2,267
6,550
−
114
56
−
47
215
678
170
67
4,628
85
−
−
114
56
−
−
−
678
170
67
4,996
−
−
Operating cashflow before working capital changes
2,108
2,632
2,097
1,995
Increase in inventories
Decrease/(increase) in receivables
Increase/(decrease) in trade and other payables
Net cash outflow from operating activities
INVESTMENT ACTIVITIES
Development costs
Acquisition of subsidiary
Proceeds on disposal of investments
Loans to subsidiary operation
Net cash outflow from investment activities
FINANCING ACTIVITIES
Continuing operations:
Issue of ordinary share capital
Share issue costs
Repayment of borrowings
Proceeds from short term loans
−
21
570
1,559
32
303
1,410
951
−
21
545
−
303
783
1,573
909
−
181
180
850
−
670
1,406
67
338
−
−
−
−
181
848
21
−
278
−
180
850
19
651
1,406
67
338
−
−
−
−
181
181
848
21
−
278
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Net cash inflow from financing activities
1,001
1,105
1,001
1,105
Net (decrease)/increase in cash and cash equivalents
from continuing and total operations
Exchange translation difference
Cash and cash equivalents at beginning of period
112
32
30
27
42
15
79
−
30
Cash and cash equivalents at end of period
15
110
30
109
15
−
15
30
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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 also has secondary listings on the Quotation Board
Segment of the Open Market of the Berlin Stock Exchange ("BER") and Xetra, the electronic trading platform
of the Frankfurt Stock Exchange ("FSE").
The Company is an investment company, mainly investing in natural resources and oil and gas projects. The
registered office and principal place of business of the Company is as detailed in the Company Information
section on page 2.
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 Fin-
ancial Reporting Standards, International Accounting Standards and interpretations issued by the International
Accounting Standards Board (IASB UK-adopted International Financial Reporting Standards (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 2021. The comparative
figures relate to the year ended 31 December 2020. The financial statements are presented in pounds ster-
ling (£ 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
Going Concern
At 31 December 2021, the Group recorded a loss for the year of £2,540,000 and had net current liabilities of
£1,445,000, after allowing for cash balances of £110,000.
During the period, the Group raised additional equity of £1.7 million in two fundraisings. In March 2021, the
Group raised £1,220,000 and in November 2021, the Group raised £475,000. Post period, in January 2022,
the Company announced an equity fundraising of approximately £561,000 with Optima Resources Limited. In
May 2021 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 oper-
ate as a going concern. The Directors have taken into consideration the level and timing of the Group’s work-
ing 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
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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 foresee-
able 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 con-
cern. 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 2021
‣ Amendment to “IFRS 4 “Insurance Contracts – deferral of IFRS 9” supports the companies implementing
the new IFRS 17 standard and it makes it simpler to report their financial performances.
‣ The amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform – Phase
2” integrate the amendments made in 2019. The amendments referred in phase 2, address issues that
might affect financial reporting when an existing interest rate benchmark is replaced with an alternative
benchmark interest rate (i.e., replacement issue) and assist companies in the application of IFRS when
changes are made to contractual cash flows or hedging relationships due to the interest rate reform, and
in providing useful information to users of the financial statements.
‣ The Amendment to IFRS 16, “Covid-19Related Rent Concessions beyond 30 June 2021” extends the
period of application of the 2020 amendment to IFRS 16, relative to the lessees’ accounting of conces-
sions granted as a result of Covid-19, by one year.
The adoption of the standards and interpretations described above, already in effect at the date of this report,
did not have a material impact on the measurement of the Group’s assets, liabilities, costs and revenues.
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 2021 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 oth-
er IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact
on the Company.
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 cir-
cumstances. 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 ap-
plies 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 meth-
od). The timing and pattern of production represents an estimation made with reference to research per-
formed by third parties and the Directors assessment of the timing and level of activity over the life of de-
veloped assets.
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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 in-
terest 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 2021 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 indic-
ators 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 adjust-
ments for other implied factors such as contingent consideration associated with the transaction. The carry-
ing value of the parent company’s investment in subsidiaries is also derived using the same valuation tech-
niques, 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 reference to correspond-
ence 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 valu-
ation 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 in-
vestment 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 as-
sumptions 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, em-
ployees 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
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has recognised the fair value of options and warrants, calculated using the Black-Scholes option pricing model. The Dir-
ectors 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.
REVENUE RECOGNITION
The Group follows IFRS 15. The standard provides a single comprehensive model for revenue recognition in a five step
process.
1. Identify all contract(s) with customers
and ensure that these are clearly docu-
mented.
The group hold a signed agreement confirming their interest in the
OML 113 license. These details the revenue and cost sharing ar-
rangements in place.
2. Identify separate performance obliga-
tions in a contract. Will a contract need to
be ‘unbundled’ into two or more compon-
ents? Alternatively, will two or more con-
tracts need to be ‘bundled’ into a single
overall obligation?
3. Determine the transaction price.
4. Is revenue recognised at a single point
in time, or over a period of time?
There is no performance obligation as such on ADM’s part. The
contract in place gives them legal rights to their share of the rev-
enues in the operations relating to the OML 113 license in the fin-
ancial year as calculated by the third party operations and man-
agement company.
The transaction price is the calculated share of revenues in the
financial period which are to be allocated to ADM. This calculation
is based on ADM’s interest in the OML 113 license in the period.
Therefore, there is no pre-set transaction price as this is a derived
return from the performance of the underlying asset under the
OML 113 license in the year.
Revenue theoretically accrues over the course of the financial
period based on the performance of the asset. In practice this rev-
enue is recognised in the group as a year end adjustment as the
final revenue posting is made based on the billing statement
provided by the third party operations and management company.
This billing statement covered the entire financial year.
5. If revenue is recognised over time, how
should progress towards completion be
measured and recognised?
As above – revenues relate to performance of the asset in the year.
However, in terms of final accounting the revenue is recognised at
a single point in time as part of the YE adjustments following the
receipt of the third party billing statement.
TAXATION
UK taxes
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities re-
lating 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.
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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 liab-
ility, 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 real-
isation, 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 liabilit-
ies 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 regula-
tions 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 re-
porting date. The Company engaged in exploration and production of crude oil (upstream activity). Therefore, its profits
are taxable under the Petroleum Profit Tax Act.
INTANGIBLE ASSETS
Intangible assets relate to the Group’s capitalised E&E costs and proportionate interest in the production as-
sets of joint operations (development costs).
The share of development costs incurred on specific projects are capitalised when all the following conditions are satis-
fied:
‣ 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 (2020 £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 expec-
ted 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.
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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 measured at fair
value through other comprehensive income’, ‘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.
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, ex-
cept for short-term receivables when the recognition of interest would be immaterial.
INVESTMENTS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Financial assets measured at fair value through other comprehensive income are designated as Fixed Asset
Investments and are recognised on the Balance Sheet when the Group becomes a party to the contractual
provisions of a financial instrument and are initially measured at fair value and carried at fair value.
Fair value gains or losses are recognised and posted to Other Comprehensive Income and held in the Finan-
cial Instruments Revaluation Reserve. Fair value measurements and techniques are set out in the accounting
policy on page 44 and referred to in Financial Assets Measured at Fair Value through Profit and Loss.
INVESTMENTS HELD FOR TRADING
All investments determined upon initial recognition as held at fair value through profit or loss were designated as invest-
ments 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 invest-
ments”. 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 agree-
ment cannot be considered to meet the definition of a joint venture.
In relation to its interests in the OML 113 operations, the Group recognises:
Annual Report 2021
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Overview // Strategic Report // Governance // Financial Statements
‣ The fair value of 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 de-
ducting 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 re-
lated 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 trans-
lation of functional currency to presentation currency.
‣ Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.
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 ex-
pense 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 decommission-
ing, discounted to its present value, using a discount rate of 10 per cent. Changes in the estimated timing of decommis-
sioning cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding ad-
justment to production plant and equipment. The unwinding of the discount on the decommissioning provision will be in-
cluded in the income statement.
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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 recognised 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 war-
rants 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.
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 transac-
tions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the trans-
lation 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 cur-
rency 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.
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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 offshore oil and gas licence in Nigeria
4. Operating Loss
Loss from continuing operations is arrived at after charging:
Directors’ remuneration (see note 6
Employee salaries and other benefits
Amortisation
Decommissioning costs – Unwinding of provision
Decommissioning costs – Change in provision estimate
Impairment of intangible assets
Auditors’ remuneration:
2021
£’000
1,751
1,751
2021
£’000
866
−
47
141
155
−
2020
£’000
799
799
2020
£’000
646
35
85
−
−
4,628
fees payable to the principal auditor for the audit of the Group’s financial statements
30
28
5. Finance Costs
Short term loan finance costs
2021
£’000
56
56
2020
£’000
67
67
52
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
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
2021
£’000
785
−
81
866
785
81
866
2020
£’000
671
10
66
747
646
64
710
Further details of Directors’ remuneration are included in the Report on Directors’ Remuneration on page 27.
Only the directors are deemed to be key management. The average number of employees (including direct-
ors) in the Group was 6 20206.
7.Income Tax Expense
Current tax – ordinary activities
2021
£’000
−
2021
£’000
2020
£’000
−
2020
£’000
Loss before tax from ordinary activities
2,540
6,904
Loss before tax multiplied by rate of corporation tax in the UK of 19% 2020 19%
483
1,312
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Total tax charge for the year
49
434
−
890
422
−
No deferred tax asset has been recognised in respect of the Group’s losses as the timing of their recoverab-
ility is uncertain.
Annual Report 2021
53
Overview // Strategic Report // Governance // Financial Statements
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.
The weighted average number of shares used for calculating the diluted loss per share for 2021 and 2020
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.
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
2021
£’000
2,540
2,540
2021
2020
£’000
6,904
6,904
2020
155,014,671
79,594,655
2021
pence
2020
pence
Earnings per share:
Loss per share from continuing and total operations
1.6
8.7
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
Number of shares in issue at the reporting date
Number of extant warrants
2021
£’000
10,986
1,318
12,304
2021
2020
£’000
11,002
1,715
12,717
2020
204,480,863
122,769,073
31,581,012
27,726,241
Total number of shares for calculation of fully diluted NAV
236,061,875
150,495,314
NAV Basic (pence per share)
NAV Fully diluted (pence per share)
54
2021
5.4p
5.2p
2020
9.0p
8.5p
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
9.Intangible Assets
GROUP
The intangible asset relates to the Group’s 9.2% revenue interest (12.3% cost share) 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.
Development costs
Cost
At 1 January
Additions
Foreign currency exchange translation difference
At 31 December
Amortisation
At 1 January
Charge for year
Impairment
Foreign currency exchange translation difference
At 31 December
Net book value at 31 December
2021
£’000
21,076
−
247
21,323
5,069
47
−
58
5,174
16,149
2020
£’000
16,071
5,287
282
21,076
363
85
4,628
7
5,069
16,007
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.
10.Investment In Subsidiaries
On 10 August 2016, the Group completed the agreement for the acquisition of Jacka Resources Nigeria Hold-
ings 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 which held a 5% revenue interest in the OML 113 li-
cence, offshore Nigeria, which includes the Aje Field ("Aje"), where oil production commenced in May 2016. In
2020 the Group paid US$4 million (£2,256,000 to acquire a further interest in Aje which increased its revenue
interest to 9.2%.
In April 2021, the Group acquired 51% of the equity in K.O.N.H. UK Limited for a nominal fee.
Balance at beginning of period
Advances to PROG
Impairment
Balance at end of period
Annual Report 2021
2021
£’000
12,316
19
−
12,335
2020
£’000
14,983
2,329
4,996
12,316
55
Overview // Strategic Report // Governance // Financial Statements
The Group’s subsidiary companies are as follows:
Name
Principal
activity
Country of incorporation
and principal
place of business
Proportion of ownership
interest and voting rights
held by the Group
ADM 113 Limited Holding
company
British Virgin Islands
Maples Corporate Services (BVI Ltd
Kingston Chambers
P.O. Box 173, Road Town, Tortola
*P R Oil & Gas
Nigeria Limited
Oil exploration
& production
Nigeria
1, Murtala Muhammed Drive
Ikoyi, Lagos
K.O.N.H. UK
Limited
Holding
company
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
Geo Estratos
MXOil, SAPI de
CV
Dormant
Mexico
Lago Alberto 319, Piso 6
IZA Punto Polanco
Col. Granada, Del. Miguel Hidalgo
CP 11520, Ciudad de Mexico
ADM Asset Hold-
ings Limited
Dormant
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
*Indirectly held
100%
100%
51%
100%
100%
11. Fixed Asset Investments
In April 2021, the Group acquired an indirect interest in Noble Hill – Network Limited, a Nigeria registered com-
pany, which holds a Risk Sharing Agreement for the development of the large-scale Barracuda Field in OML
141, an existing discovery and near-term production asset in swamp/shallow waters offshore Nigeria. The
consideration paid was US$ 0.25m (£180,000 in cash and US$ 0.55m (£396,000 in shares, issued at 7p per
share, a total of US$ 0.8m (£576,000. Overall consideration may total up to US$1.3m, the remainder of the
consideration being contingent on the demonstration of commercial flow rates from the first new well.
Cash at bank
Cash and cash equivalents
12.Investments Held For Trading
GROUP AND COMPANY
2021
£’000
576
576
2020
£’000
−
−
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categor-
isation 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
56
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
The investments held by the Group are designated as at fair value through profit or loss.
Fair value of investments brought forward
Disposal of investments
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
2021
£’000
878
850
−
28
28
28
2020
£’000
200
−
678
878
878
878
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categor-
isation 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 in-
cluded 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.
13. Inventory
Inventory represents the Group’s share of the stock of oil lifted but unsold, stated at the lower of cost and
market value
Inventory
Total inventory
GROUP
COMPANY
2021
£’000
33
33
2020
£’000
32
32
2021
£’000
−
−
2020
£’000
−
−
14. Trade And Other Receivables
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 2021 and 2020 there were no trade receiv-
ables.
Annual Report 2021
57
Overview // Strategic Report // Governance // Financial Statements
GROUP
COMPANY
2021
£’000
121
9
130
2020
£’000
42
67
109
2021
2020
£’000
£’000
121
9
130
42
67
109
GROUP
COMPANY
2021
£’000
110
110
2020
£’000
30
30
2021
£’000
109
109
2020
£’000
30
30
GROUP
2021
£’000
397
592
−
22
−
523
1,534
2,913
2020
£’000
468
395
2,766
71
104
402
4,206
COMPANY
2021
£’000
397
592
−
22
−
504
1,515
2020
£’000
468
395
−
71
104
391
1,429
−
−
−
4,447
4,206
1,515
1,429
Other receivables
Prepayments and accrued income
15. Cash And Cash Equivalents
Cash at bank
Cash and cash equivalents
16. Trade And Other Payables
CURRENT PAYABLES
Trade payables
Tax and social security
Amount owed in respect of OML 113 operating agreement
Other payables
Short term loan finance
Accruals and deferred income
NONCURRENT PAYABLES
Amount owed in respect of OML 113 operating agreement
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 net revenues of the project.
58
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
The fair value of trade and other payables is considered by the Directors not to be materially different to car-
rying amounts.
17. 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 per cent. 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
was partly repaid and partly converted into shares during the year.
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:
Liability component at 1 January
Nominal value of convertible Loans
Equity component
Interest charged
Loan converted into equity
Repayments
Liability component at 31 December
Current portion of loans
Non-current portion of loans
GROUP AND COMPANY
2021
£’000
519
−
2
30
127
208
212
212
−
212
2020
£’000
−
523
17
13
−
−
519
235
284
519
The interest charged for the year is calculated by applying an effective average interest rate of 12 per cent 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
2021 to be approximately £212,000. The fair value has been calculated by discounting the future cash flows
at the market rate of 12 per cent.
OTHER BORROWINGS
Other loan
Annual Report 2021
2021
£’000
247
2020
£’000
297
59
Overview // Strategic Report // Governance // Financial Statements
£50,000 of the other loan was converted into shares during the year. The balance of the loan 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 any time during the remaining term of the loan at the
discretion of the Group. 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
set out by IFRS 9.
18. Decommissioning Provision
In accordance with the agreements and legislation, the wellheads, production assets, pipelines and other in-
stallations 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 per cent.
The following table presents a reconciliation of the beginning and ending aggregate amounts of the obliga-
tions associated with the decommissioning of oil and natural gas properties
Balance brought forward
Arising during the year
Foreign currency exchange translation difference
As at 31 December 2020
19. Called Up Share Capital
2021
£’000
1,032
219
13
1,264
2020
£’000
−
1,032
−
1,032
Number of
Ordinary
shares
Value
£’000
Number of
deferred shares
Value
£’000
Total
value
£’000
Share
Premium
£’000
Issued and fully paid
At 1 January 2020 (ordinary shares of 1p)
59,501,210
Shares issued
63,267,863
Warrants issued in connection with
equity subscriptions
Share issue costs
Warrants exercised
−
−
−
595
633
−
−
−
8,222,439,370
8,222
−
−
−
−
−
−
−
−
8,817
633
−
−
−
34,012
2,560
(16)
(21)
56
At 31 December 2020
122,769,073
1,228
8,222,439,370
8,222
9,450
36,591
Shares issued (see notes below)
81,711,790
Share issue costs
−
817
−
−
−
−
−
817
−
1,517
94
At 31 December 2021
204,480,863
2,045
8,222,439,370
8,222
10,267
38,014
60
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
The deferred shares have restricted rights such that they have no economic value.
SHARE ISSUES IN YEAR
On 24 March 2021, 21,23,921 ordinary shares of 1p were issued at 4.25p each as a result of a placing, raising
£931,767 before expenses and 6,786,329 shares were issued at 4.25p each in settlement of liabilities totaling
£288,419.
On 8 April 2021, 208,333 ordinary shares of 1p were issued at 2.4p each in settlement of liabilities totaling
£5,000 and 235,294 shares were issued at 4.25p each to settle liabilities totaling £10,000.
On 28 April 2021, 5,657,912 ordinary shares were issued at 7p each to settle US$550,000 £396,054, being
part consideration for the acquisition of 51% of K.O.N.H. UK Ltd.
On 15 November 2021, 31,666,667 ordinary shares were issued at 1.5p each as a result of a placing, raising
£475,000 before expenses, and 15,233,334 ordinary shares were issued also at 1.5p each in settlement of
liabilities totaling £228,500.
20. Other Reserves
Balance at 1 January 2020
Issue of new shares
Warrants issued in settlement of fees
Warrants exercised
Issue of convertible loans
Balance at 31 December 2020
Warrants issued in settlement of fees
Extension of convertible loan terms
Balance at 31 December 2021
21. Share Warrants
Shares to be
issued
Reserve for
warrants issued
Convertible loan
note reserve
Other reserves
£’000
150
(150)
−
−
−
−
−
−
−
£’000
£’000
£’000
720
16
170
(106)
−
800
141
−
941
−
−
−
−
17
17
−
2
19
870
(134)
170
(106)
17
817
141
2
960
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 24 March 2021, the Company issued 502,941 share warrants to advisers in respect of a private placing.
The warrants are exercisable at 4.25p per share for a period of 5 years from the date of issue. Also on 24
March 2021 the Company agreed to rebase the exercise price of 4,705,882 warrants, issued in 2020, to equal
the share issue price of 4.25p
On 15 November 202, the Company issued 6,666,667 share warrants in connection with the share placing.
The warrants are exercisable at 3p per share for a period of 2 years from the date of issue.
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:
Annual Report 2021
61
Overview // Strategic Report // Governance // Financial Statements
Issue date
15 Nov
2021
24 Mar
2021
24 Mar
2021
8 Jan
2020
6 May
2020
25 Aug
2020
25 Aug
2020
25 Aug
2020
Issue date share
price
1.5p
4.25p
4.25p
4.75p
2.4p
5.5p
5.5p
5.5p
Exercise price per
share
3p
4.25p
4.25p
8p
2.4p
4.25p
5.5p
5.5p
No. of warrants
6,666,667
9,411,764
502,941
2,148,000
8,333,333
4,705,882
909,091
120,000
Risk free rate
1%
Expected volatility
50%
1%
50%
1%
50%
1%
50%
1%
50%
1%
50%
1%
50%
1%
50%
Expected life of
warrant
Calculated fair
value per share
2 years
2 years
5 years
2 years
2 years
2 years
2 years
5 years
0.26475p
1.20513p
1.86234p
0.58612p
0.68054p
2.09916p
1.55958p
2.41010p
The share warrants outstanding at 31 December 2020 and their weighted average exercise price are as fol-
lows:
2021
2020
Outstanding at 1 January
Issued
Issued
Issued
Issued
Exercised
Lapsed or cancelled
Number
18,801,601
2,148,000
8,333,333
4,705,882
1,029,091
7,291,666
−
Outstanding at 31 December
27,726,241
Weighted average
exercise price
Weighted average
exercise price
(pence)
Number
(pence)
6.71
8.00
2.40
4.25
5.50
2.40
−
6.18
18,801,601
2,148,000
8,333,333
4,705,882
1,029,091
7,291,666
−
27,726,241
6.71
8.00
2.40
4.25
5.50
2.40
−
6.18
The fair value of the share warrants recognised as part of the premium paid in respect of the share subscrip-
tions in the year was £27,000 and in respect of the share warrants issued in settlement of fees £113,000 was
recognised as the fair value expense in the income statement. Both these amounts were credited to the
share warrant reserve. In 2020, £186,000 was recognised in the financial statements as the fair value of war-
rants issued.
22. Risk Management Objectives And Policies
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are:
62
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
‣ 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 struc-
ture and equity holder returns, taking into consideration the future capital requirements of the Group and cap-
ital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital ex-
penditures 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 per cent in their fair value, this would result in
the Group’s net asset value and statement of comprehensive income increasing or decreasing by £60,000 2020
£88,000.
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 re-
ceivables, and cash and cash equivalents. The credit risk for cash and cash equivalents is not considered ma-
terial since the counterparties are reputable banks. The maximum exposure to credit risk for loans and re-
ceivables 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
Annual Report 2021
2021
£’000
110
121
231
2020
£’000
30
42
72
63
Overview // Strategic Report // Governance // Financial Statements
LIQUIDITY RISK
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 inves-
ted such that the maximum available interest rate is achieved with minimal risk.
23. 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
Fixed asset investment
Investments held for trading (see fair value measurements below)
FINANCIAL ASSETS BY IFRS 7 FAIR VALUE HIERARCHY
Level 3 Investments held for trading
2021
£’000
2020
£’000
110
576
28
28
28
30
−
878
878
878
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 in-
cluded 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”.
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:
64
Annual Report 2021
Overview // Strategic Report // Governance // Financial Statements
Trade and other payables
Borrowings
2021
£’000
3,924
459
2020
£’000
3,700
920
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 fin-
ancial 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 undis-
counted 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
£’000
£’000
£’000
15
years
£’000
Over 5
years
£’000
2021
Interest bearing:
Borrowings
Non-interest bearing:
Trade and other payables
2020
Interest bearing:
Borrowings
Non-interest bearing:
Trade and other payables
−
−
−
−
−
212
247
1,011
−
2,913
−
339
581
3,700
−
−
−
−
−
−
As at 31 December 2021 the Group had net debt (defined as cash less borrowings) of £349,000 2020 net
debt of £890,000. The movement arose from cash flows with the exception of £177,000 borrowings which
was settled in equity.
24. 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 part-
ners in respect of the joint operating agreement. The provisional findings of the audit indicate that the Group’s
liability is materially lower than as shown in the Group’s accounts, but as the audited figures have not yet been
agreed by the partners to the joint agreement it has been considered prudent to show the Group’s liability in
line with the figures produced by the project’s operator.
Annual Report 2021
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Overview // Strategic Report // Governance // Financial Statements
25. 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.
26. Ultimate Controlling Party
The Directors do not consider there to be a single ultimate controlling party.
27. Post Period End Events
On 21 January 2022, the Company announced that it had raised approximately £561,000 of equity issuing
51,000,000 new ordinary shares at a price of 1.11 pence per share. In conjunction with the share issue
15,300,000 warrants were issued at an exercise price of 4.5 pence per share, with an exercise period of 2
years.
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Annual Report 2021