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CONTENTS
PAGE
Company Information
3
2023 Overview
4
Chairman’s Report
5
Chief Executive Officer's Review and Strategic Report
6
Board of Directors
9
Investment Approach
10
Directors' Report
11
Corporate Governance Report
13
Chairman’s Corporate Governance Statement
15
Report on Directors’ Remuneration
19
Report of the Independent Auditor
20
FINANCIAL STATEMENTS
Group Income Statement
28
Group and Company Statements of Financial Position
29
Group Statement of Changes in Equity
30
Company Statement of Changes in Equity
31
Group and Company Statements of Cash Flows
32
Notes to the Financial Statements
34
WHO WE ARE
ADM Energy is a natural resources investing company with oil and gas assets in West
Africa and the US. We hold a 9.2% profit interest in the Aje Field, part of OML 113 in
Nigeria. Post year-end we completed an investment in JKT Reclamation, LLC (“JKT”),
in which we own a 30.6% economic interest, and Vega Oil and Gas, LLC (“Vega”) of
which we own 100%. Both JKT and Vega are revenue generative businesses in the USA
and together comprise the foundation of our strategy to build a cash flow positive
business.
We are seeking to build on our existing asset base and target other investment
opportunities in the oil and gas sector. Our strategy is to identify and invest in high-
impact, near-term producing assets that can deliver significant value. These will be
based on attractive risk reward profiles such as proven nature of reserves, level of
historic investment, established infrastructure, route to early cash flow and upside.
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admenergy plc
COMPANY INFORMATION
DIRECTORS:
Stefan Olivier (Chief executive Officer)
Lord Bellingham (Non-executive Director)
Dr Stefan Liebing (Non-executive Director)
REGISTERED OFFICE:
60 Gracechurch Street
London, EC3V 0HR
COMPANY NUMBER:
05311866
SECRETARY:
Ben Harber
NOMINATED ADVISER:
Cairn Financial Advisers LLP
107 Cheapside
London, EC2V 6DN
BROKER:
Hybridan LLP
2 Jardine House
The Harrovian Business Village
Beesborough Road, Harrow
Middlesex HA1 3EX
REGISTRARS:
Computershare Investor Services Plc
The Pavilions
Bridgwater Road
Bristol, BS99 6ZZ
INDEPENDENT AUDITOR:
Kreston Reeves LLP
Chartered Accountants & Statutory Auditor
2nd Floor
168 Shoreditch High Street
London, E1 6RA
FINANCIAL PR:
Gracechurch Group
48 Gracechurch Street
London, EC3V 0EJ
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2023
OVERVIEW
Investment Highlights
•
Aje consortium initiated reprocessing of 3-D seismic covering the Aje Field and a significant portion of the OML 113
license area offshore Nigeria. The reprocessing was completed in early 2024.
•
Acquisition of economic interest (46.8% as of 15 December 2024) in OFX Technologies, LLC ("OFXT") 100% owner of
Efficient Oilfield Solutions, LLC, a revenue generative, technology company focused on delivering technology
solutions that increase efficiency, lower costs and aid in the management of regulatory requirements of the U.S.
upstream oil and gas industry.
•
Acquisition of Blade Oil V, LLC on 25 May 2023 (later partially unwound), retaining participation interest in the
Altoona Lease located in the Midway-Sunset Oilfield, Kern County, California.
•
The Board of Directors completed an internal review on 1 May 2023 of existing investments, financial resources and
future investment opportunities available to the Company. As a result, the Board has resolved to consider
alternatives for monetising its 12.3% cost share and 9.2% profit share interest in the Aje Field, OML-113 offshore
Lagos, Nigeria.
Corporate and Financial Highlights
•
Appointment of Lord Henry Bellingham as Chairman of the Board of Directors of ADM Energy plc on 15 December
2023.
•
Stefan Olivier and Claudio Coltellini appointed to the Board of Directors on 25 April 2023, with Stefan Olivier
joining as Chief Executive Officer and Claudio Coltellini as Non-executive Director. The appointments of Mr
Olivier and Mr Coltellini come further to the Company's announcement of 17 October 2022 pursuant to
which OFX Holdings, LLC (formerly Tennessee Black Gold, LLC) ("OFX")was granted the right to appoint two
directors as part of a £500,000 equity subscription.
•
In May 2023 the Company entered into subscription agreements to issue secured convertible loan notes
("SCLN") with an aggregate face value of US$900,000.
•
Claudio Coltellini subsequently resigned on 13 December 2024.
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CHAIRMAN’S REPORT
FOR THE YEAR ENDED 31 December 2023
Dear Stakeholders,
2023 marked the beginning of a rebuilding of ADM from
the ground up. This rebuilding has to date focused on
establishing a solid foundation from which to grow
shareholder value in the future. Steps taken in 2023
entailed changes to the Board, the management,
implementation
of
cost
cutting
measures,
the
undertaking of a strategic review of the Company’s legacy
asset – our 12.3% cost share and 9.2% profit share in
OML-113, Aje Field, offshore Lagos, Nigeria – and a focus
on identifying and securing cash generative investments
in the United States capable of generating meaningful
cash in the near-term.
While the near-term focus of the Board is establishing a
solid foundation for the Company, the Board is keeping
an eye on trends in world energy markets, the world
economy and implications of these for the future.
According to bp’s Energy Outlook 2024, the world is “in
an ‘energy addition’ phase of the energy transition in
which it is consuming increasing amounts of both low
carbon energy and fossil fuels” (BP Energy Outlook 2024).
The Board of ADM believes bp’s observation is even more
apropos given the growth in AI and data centres and the
increasing demand for energy that this growth will
require.
While many governments of the world are committed to
the energy transition, and we applaud these efforts, the
Board of ADM believes that the world will witness
growing hydrocarbon demand for many years and with
declining rates in legacy oilfields worldwide believed to
be greater than 5% per annum, millions of barrels per day
of new production will need to be added to meet world
demand requirements.
ADM therefore remains committed to the production of
oil and gas and businesses that support increased
production. This may include development of producing
assets, midstream activities associated with gathering
crude oil, recycling and reclamation of crude oil from
waste streams that would otherwise be disposed of in
landfills (and therefore contributing to oil production
levels while preserving valuable and finite landfill space)
or oilfield services and technologies that improve the
efficiency of oil and gas operations.
The Board is focusing on opportunities in the United
States as it is a jurisdiction that, due to political and
economic stability and the organization of its oil and gas
industry, continues to present opportunities that are
suitable, from a capital requirement standpoint, for
smaller companies.
From a corporate governance standpoint, the first part of
2023 was highlighted by the return of Stefan Olivier, a
founder of ADM, as executive director and Chief
Executive Officer of the Company and the addition of Mr.
Claudio Coltellini as a non-executive director.
Mr. Coltellini, through investment vehicles managed by
him (including OFX Holdings, LLC – “OFXH” – a substantial
shareholder of the Company), provided significant
financial support (in excess of £1 million) to the Company
during the initial phase of our rebuilding strategy and for
this we are very grateful.
I was appointed Chairman of the Board in November
2023 and am committed to completing the rebuilding of
the Company and overseeing its development into a
meaningful and successful company for benefit of all
stakeholders.
Lord Henry Bellingham
Non-Executive
Chairman
30 December 2024
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CHIEF EXECUTIVE OFFICER’S REVIEW AND STRATEGIC REPORT
FOR THE YEAR ENDED 31 December 2023
Overview
2023 was a year of challenges. On returning to the Board of the Company – a Company of which I was a founder and care about
very deeply – my initial focus was in stabilizing the Company to give the Board time to implement our strategy to rebuild ADM.
The immediate focus was cash. Both securing cash resources to implement the rebuilding plan and reducing G&A expenditures
to allow the Company the time to complete our rebuilding plan. With support from shareholders of the Company we secured
in excess of £1,000,000 in capital in 2023.
OML-113, Aje Field
The legacy asset of the Company is a 12.3% cost share/9.2% profit share interest in OML-113, Aje Field offshore Lagos, Nigeria.
Members of the OML-113 (“Aje Field”) consortium, including the Company initiated a reprocessing of the 3-D seismic of Aje Field
during 2023 which was completed in early 2024. In November of 2023, The Board of ADM formally announced its intention
monetize the Company’s interest in the Aje Field. These discussions continue as of this writing.
Acquisition of Blade V
The acquisition of Blade Oil V, LLC was originally intended to give the Company a portfolio of near-term oil and gas development
assets. As the year progressed the Company shifted its focus to debt reduction and the identification of and investment in cash
generative assets. As such the Company and OFX Holdings, LLC agreed to unwind a significant portion of the Blade Oil V transaction
while retaining its participation in the Altoona Lease which is believed by the Board of Directors to have extraordinary potential
to create shareholder value and realize highly attractive return on investment.
Investment in OFX Technologies, LLC
The digitisation of the oilfield is a trend that has witnessed increasing momentum in recent years. Barclay’s estimates that
upstream spending on digital technologies will grow to a US$30 billion+ per year market by 2025. ADM completed an investment
in OFX Technologies, LLC (“OFXT”), 100% owner of Efficient Oilfield Solutions, LLC (“EOS”) (www.efficientoilfieldsolutions.com) in
November 2023. EOS offers a free-to-download App supported on iOS and Android platforms. The App allows oilfield operators,
trucking companies and salt-water disposal companies to reduce time and save cost associated with regulatory compliance and
logistics associated with the management of produced water resulting from oil and gas production operations.
ADM acquired a 46.8% economic interest for total maximum consideration of US$1,285,000 consisting of 86,035,489 ordinary
shares and US$235,000. Since completion of the acquisition EOS has diligently been working to upgrade its SaaS offering to offer
the functionality, auditing support and other requirements of larger operators and trucking companies. EOS has also expanded
its market area from Louisiana only at the completion of the investment to include Texas.
The Board believes that OFXT has significant potential to create significant value for the Company in the long-term as the business
continues to mature. However, it is not expected that OFXT will generate significant cash distributions to the Company in 2024
or 2025.
Financial Review
For the year ended 31 December 2023, the Group’s revenue decreased by 100% to nil (2022 £0.7 million), reflecting the suspension
of production at Aje.
Operating costs increased to £13.4 million (2022: £0.4 million).
Decommissioning provision amounted to £1.6 million (2022: £1.6 million).
Depreciation & amortisation expense decreased to £0.06 million (2022: £0.07 million).
Administrative expenses decreased by 9% to £1.6 million (2022: £1.7 million).
Loss after taxation decreased to £17.8 million (2022: £2.1 million loss). The Directors do not propose a dividend (2022: £nil).
As of 31 December 2023, the Group had cash and cash equivalents of nil (2022: £0.025 million).
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CHIEF EXECUTIVE OFFICER’S REVIEW AND STRATEGIC REPORT
FOR THE YEAR ENDED 31 December 2023
Outlook
The rebuilding process initiated in 2023 remained, at year-end, very much a work in process. Significant strides were taken in
2024. Two key investments were completed in 2024 that are bearing fruit as the Company prepares to enter 2025:
JKT Reclamation, LLC. The Company completed an investment effective 1 January 2024 resulting in the Company holding a 30.6%
economic interest in JKT Reclamation, LLC (“JKT”). JKT is engaged in the reclamation of saleable crude oil from waste streams of oil
at a 20-acre facility located in Wilson, Oklahoma. The Board believes that JKT has the potential to generate significant cash
distributions to the Company in 2025 as oil volumes sold continue to grow.
Vega Oil and Gas, LLC. The Company completed an investment effective 1 June 2024 resulting in the Company holding a 100%
interest in Vega Oil and Gas, LLC (“Vega”). Vega owns interest in three completed oil wells in Moore County, Texas. The wells are
completed to the Red Cave formation. The Company is working to restore all three of the wells to production.
The Board believes that both JKT and Vega have significant potential to distribute meaningful cash to the Company in 2025 and
beyond and intend to continue to develop the sites in order to receive increasing levels of cash in distributions from its U.S.
investments in 2025.
Key Performance Indicators (“KPIs”)
The Company is shifting away from a net asset value based approach to measuring our progress and delivering shareholder value
to a forward looking, cash flow based approach. The following KPIs are those that the Board is focused on and will give investors the
ability to measure our progress in implementation of the strategy for rebuilding ADM:
Ø
Low overhead: Company G&A less than the greater of (i) £30,000 per month; or, (ii) 25% of Operating Cash Flow.
Ø
Reduce debt: debt with recourse to the Company to less than £1 million.
Ø
Cash generative investments: 1H 2025 target of US$100,000 per month from U.S. investment portfolio. Two key indicators
that will allow the Company to achieve these objectives are:
o
2,000 + barrels sold by JKT in December 2024 with consistent month-over-month sales growth in Q1 2025.
o
All three Vega wells producing by end of February 2025.
Ø
Scalability: Focus on investments with potential to scale into a significant business. Two key objectives of this are:
o
Achieve 5,000 + barrels per month sold by JKT in 2025.
o
Complete a two well drilling program at Vega in 2025.
Ø
Frequent Newsflow: 2-3 RNS per month to keep investors informed of investment performance and progress.
Our Principal risks and uncertainties
Commodity Prices
The Group is exposed to risks arising from fluctuations in the demand for, and price of, hydrocarbons. Oil and gas prices depend on
numerous factors over which the Group does not have any control, including global supply, international economic trends, currency
exchange fluctuations, inflation, consumption patterns and global or regional political events. This risk impacts evaluation of
business development opportunities where commerciality depends on assumptions around future commodity prices. In terms of
evaluating and sanctioning new investments, the Group adopts a conservative price forecast to ensure capital is allocated to projects
with robust economics, even in lower commodity price environments
Sanctions Risk
The Company and all subsidiaries are committed to ensuring that all parts of our business and all our employees fully comply with
all sanctions laws applicable to our work. These include all applicable United Kingdom (“UK”) sanctions laws and associated
regulations and US regulations.
Availability of funding Risk
The Group’s asset portfolio does not yet generate the cash necessary to grow the business at a rate in keeping with its ambition and
the Group will need to raise additional funds to implement its strategy. The ability of the Group to raise funds will depend on factors
not wholly with the control of management, including general market sentiment and attitudes toward small-cap energy companies.
As a result there can be no assurance that the required funding will be available on favourable terms, if at all. Failure to raise required
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CHIEF EXECUTIVE OFFICER’S REVIEW AND STRATEGIC REPORT
FOR THE YEAR ENDED 31 December 2023
funds could have a material adverse effect on the Group’s business, operating results and financial condition, and may result in
erosion of value for shareholders.
The Group’s strategic focus on acquiring and developing an asset portfolio, and the post year investments partly mitigates the risk
and management also seeks to mitigate risk through prudent management of costs and rigorous evaluation of investment
opportunities to ensure these will be attractive to investors in the debt and capital markets.
STEFAN OLIVIER
Chief Executive Officer
30 December 2024
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INVESTMENT APPROACH
STEFAN OLIVIER, Chief Executive Officer (Appointed 25 April 2023)
Stefan Olivier has extensive corporate broking and oil and gas experience including as co-founder of MX Oil plc (now
ADM Energy plc). Stefan played a central role in initially securing and financing the participation of the Company in
the Aje Field, OML 113 and in securing the support of OFX prior to its initial investment in the Company. He was a
founder and Chief Executive Officer at North American Petroleum plc from 2012 until 2017. He has been on the
Board of several other public and private companies and brings years of experience of working in natural resources
to the Board of the Company.
CLAUDIO COLTELLINI, Independent Non-executive Director (Appointed 25 April 2023, resigned 13
December 2024)
Claudio Coltellini is an Italian citizen now residing with his family in the state of Florida. Prior to working in the U.S.
onshore oil and gas sector, having graduated with a degree in economics and business, he joined Deutsche Bank
where he worked for seven years. He has invested in the U.S. oil and gas sector for approximately 15 years and is
CEO of four private U.S. oil and gas companies focused on investment in the states of Texas, California, Kansas and
Louisiana.
DR STEFAN LIEBING, Independent Non-executive Director
Dr Stefan Liebing is the CEO of Conjuncta GmbH, a boutique investment and project development company and
has been active in major infrastructure and energy projects since mor than twenty years. Dr Stefan Liebing is the
Immediate Past Chairman of Afrika-Verein der deutschen Wirtschaft e.V., the prestigious German-African Business
Association, where as part of his role, he advised the German Government on investment in Africa. Previously, Dr
Liebing was a Director of International Gas Business at EnBW Energie Baden-Wuerttemberg AG, one of the largest
energy supply companies in Europe. Previously he held various senior positions at Royal Dutch Shell.
LORD BELLINGHAM, Independent Non-executive Director
Lord Bellingham has enjoyed a distinguished Parliamentary career of almost 40 years and held a number of senior
positions including: Foreign Office Minister for Africa, The UN, Caribbean, Overseas Territories and Conflict Issues;
Chairman of the Westminster Foundation for Democracy; Chairman of the All-Party Group on the Commonwealth;
and the Prime Minister`s Trade Envoy to Libya. In 2016, he was Knighted in the New Year Honours list for
Parliamentary and Political Service. He sits in the House of Lords after being awarded a Life Peerage in 2020.In
addition to his Parliamentary career, Lord Bellingham has held several non-executive roles on AIM companies and,
until recently, was Non-executive Chairman of Pathfinder Minerals plc since 2014. Prior to entering Parliament, Lord
Bellingham practised as a barrister having graduated from Magdalene College, Cambridge with a master’s degree
in Law.
OLIVER ANDREWS, Non-executive Chairman (Resigned 15 December 2023)
Oliver has over 35 years’ experience in infrastructure development, investing, public-private partnerships and
strategic advisory work such as advising and partnering with governments, regional and international corporations
and development finance institutions. During his career, he has overseen the investment of approximately US$10bn
and originated US$100bn of investments in natural resources and infrastructure deals across the African continent
on behalf of investee institutions. Oliver was formerly Executive Director and Chief Investment Officer at the Africa
Finance Corporation, one of the biggest investors in natural resources and infrastructure solutions in Africa, where
he oversaw the growth of assets under management from US$1bn to over US$8.4bn including significant
investments in the oil and gas sector.
RICHARD CARTER, Chief Operating Officer (Resigned 15 December 2023)
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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INVESTMENT APPROACH
Investing Approach
The Company will seek to invest in opportunities within the natural resources sector, the oil services, power and energy sectors and
in technology opportunities related to these sectors that the Directors believe either are of strategic value or represent a significant
value opportunity. The Company is prepared to take an active role in its investments where it is deemed to be appropriate.
The Directors plan to adopt a flexible approach, both as to the form of the Company’s investments and the subject of its investments.
The investments may be in quoted and unquoted companies. This includes making investments in other quoted investment
companies focused on the natural resources, power and energy sectors or related technologies, including those with no significant
assets other than cash. The Directors believe that investing in these other investing companies will provide the Company with greater
scope to make and support its investment strategy.
The Company’s investments may take the form of equity, debt, convertible instruments, options and licence rights. Possible
investments could include direct or indirect investments in permits and licences, exploration, mining and production operations and
processing and development projects.
The Company may make direct investments in private or quoted companies and indirect investments via quoted companies,
unquoted companies seeking a public quotation and candidates for reverse transactions into quoted investment companies. The
Company may invest in these types of opportunities through acquisitions, partnerships, joint venture arrangements, as finance for
management buy-outs or buy-ins, as finance for pre-IPO, seed and underwriting positions.
Such investments may result in the Company acquiring the whole or part of a company or project. The Company will consider
opportunities anywhere in the world.
The Company expects to be an active investor in situations where the Company can make a clear contribution to the progress and
development of the investment. In respect of other, principally more substantial opportunities, the Company expects to be a passive
investor.
The Company intends to invest for the medium to long-term. However, should an opportunity arise to realise its investments, the
Company will consider these on a case-by-case basis and seek to maximise value for shareholders. The Directors intend to hold all
investments for a minimum of 30 days. Other than set out above, there are no restrictions on the Company’s investment policy.
The Company intends to utilise industry experts in the analysis of proposed investments, and it is intended that the decision-making
process will be a collegiate, team-based approach, driven by intrinsic value or informed opinion.
Our Sustainable Approach
ADM Energy is committed to the highest standards of corporate social responsibility in its investing policy. Working alongside its
partners, the Company strives to ensure the safety of all staff and contractors, while minimising environmental impact, for the
benefit of the communities in which it works and all its stakeholders.
ADM conducts its investment operations in a responsible and transparent manner. Being socially responsible is a key component in
the Company’s business and its achievements. This includes not only adherence to Government legislation and Company policies,
but must extend to acceptance that ADM is, in all the projects in which it holds an investment, a neighbour in established
communities and environments.
The Company is conscious of the impact to the environment and local communities that oil and gas activities may have and aims to
minimise and constantly reduce these effects. The projects in which ADM invests comply with all existing laws, regulations and
permits. By making continuous improvements, the Company’s ambition is to set a good example in the markets where it is active.
ADM’s focus in its projects is environmental protection, pollution prevention and human health. The Company’s actions are
characterised by respect for the cultures of the regions in which it operates. ADM is committed to maintaining an open dialogue over
the environmental aspects of its investments and the operations of the partners in these projects with all stakeholders.
The UK-registered subsidiaries of the group, including the parent company ADM Energy PLC, did not consume more than 40,000 kWh
of energy in a reporting period. The group therefore qualifies as a low energy user and is exempt from further energy and carbon
reporting under Environmental Reporting Guidelines.
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DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 December 2023
The Directors present their annual report on the affairs of the Group, together with the financial statements for the year ended 31
December 2023.
Certain information required by the Companies Act 2006 relating to the information to be provided in the Directors’ Report is set
out in the Strategic Report and includes principal activity, future developments and principal risks and uncertainties.
DIRECTORS
The Board comprised the following directors who served throughout the year and up to the date of this report unless otherwise
stated.
Stefan Olivier
(Appointed 25 April 2023)
Oliver Andrews
(Resigned 15 December 2023)
Richard Carter
(Resigned 15 December 2023)
Manuel Lamboley (Resigned 25 April 2023)
Claudio Coltellini
(Appointed 25 April 2023, resigned 13 December 2024)
Lord Bellingham
Dr Stefan Liebing
DIRECTORS’ INTERESTS
Set out below are the Directors’ beneficial holdings of ordinary shares in the Company as at 31 December 2023. Their interests in
the Company’s share warrants are included in the Report on Directors’ Remuneration.
Name of director
Ordinary shares of
1p each
Number
Percentage
of capital
%
Options
Stefan Olivier
4,166,667
0.86%
21,299,823
Oliver Andrews
8,333,333
1.72%
4,348,714
Richard Carter
2,431,496
0.82%
10,649,911
Manuel Lamboley
1,250,000
0.26%
-
Dr Stefan Liebing
1,801,417
0.37%
3,194,973
Lord Bellingham
1,375,000
0.28%
4,348,714
SUBSTANTIAL SHAREHOLDINGS
Interests in excess of 3% of the issued share capital of the Company which have been notified to the Company as at 30 December
2024 were as follows:
Name of shareholder
Ordinary shares of
1p each
Number
Percentage
of capital
%
Optima Resources Holding Ltd
51,000,000
17.16%
OFX Holdings, LLC
68,961,334
17.34%
Catalyse Capital Limited & related parties
60,304,031
9.6%
Hessia Group Limited
36,449,303
7.52%
Tennessee Black Gold, LLC
25,981,667
5.36%
Apeiron Management Limited
21,733,333
4.48%
POST YEAR END EVENTS
Events after the reporting period are set out in Note 29 to the Financial Statements.
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DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 December 2023
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the report of the directors and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare group financial statements in accordance with 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 financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgments and accounting estimates that are reasonable and prudent;
•
state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial
statements; and
•
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that
the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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 unaware; and
•
that director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit
information and to establish that the Group’s auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
CORPORATE GOVERNANCE
Corporate governance regulations apply to all AIM quoted companies and require the Company to:
•
provide details of a recognised corporate governance code that the board of directors has decided to apply; and
•
explain how the Company complies with that code, and where it departs from its chosen corporate governance code provide
an explanation of the reasons for doing so.
The Directors recognize 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. The Group’s Corporate
Governance Report is included on page 12.
AUDITORS
The auditors, Kreston Reeves LLP have expressed their willingness to continue in office, and a resolution to reappoint them will be
proposed at the forthcoming Annual General Meeting.
DISCLOSURE OF INFORMATION TO AUDITORS
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
• so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
• the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information
and to establish that the Company's auditors are aware of that information.
On behalf of the Board.
Stefan Olivier
Director
30 December 2024
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CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 December 2023
INTRODUCTION
All members of the Board believe strongly in the value and importance of good corporate governance and in accountability to all of
ADM Energy’s stakeholders. The statement below, explains the approach to governance, and how the Board and its Committees
operate.
The corporate governance framework which the Company operates, including board leadership and effectiveness, board
remuneration, and internal control is based upon practices which the Board believes are proportional to the size, risks, complexity
and operations of the business and is reflective of the Group’s values. Of the two widely recognised formal codes, we have therefore
decided to adhere to the Quoted Companies Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies
(revised in April 2018 to meet the new requirements of AIM Rule 26).
The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers to be
appropriate arrangements for growing companies and asks companies to provide an explanation about how they are meeting the
principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the Board judges
these to be appropriate in the circumstances, and below we provide an explanation of the approach taken in relation to each.
The following paragraphs set out the Company’s compliance with the ten principles of the QCA Code.
•
Establish a strategy and business model which promotes long-term value for shareholders
The Company is an investing company quoted on AIM. Its principal focus is investing in the natural resources sector, particularly in
oil and gas where it believes that it can make an attractive return for shareholders. The Company expects to generate returns for
shareholders through the development of its investments.
In April 2024, ADM acquired an interest in SW Oklahoma Reclamation, LLC ("SWOK") to reinitiate operations at the JKT Reclamation
facility in Wilson, Oklahoma. As a result of the Investment, the Company owns a 30.6% interest in JKT Reclamation LLC ("JKT
Reclamation"), a revenue generative Oklahoma Limited Liability Company, engaged in the purchase, processing and sale of residual
oil from oil tanks (tank bottoms) and other oilfield waste streams containing significant concentrations of crude oil. The
consideration for the investment was US$827,500 paid via the issue of 43,200,000 ordinary shares at a nominal share price of 1p
per share for a value of US$540,000, a cash investment of US$287,500 for working capital into JKT Reclamation and the grant of
14,640,000 3-year, 1.0p warrants. The effective date of the investment is 1 January 2024 and it is expected to be immediately cash
flow generative to the Company.
ADM acquired a 100% equity interest in Vega Oil and Gas, LLC, a Texas Limited Liability Company with assets in Moore County,
Texas. The acquisition was effective from 1 June 2024. The transaction was funded by a US$150,000 capital commitment by ADM
USA, a US$100,000 borrowing facility from a private, third-party US lender and the issuance of 20 million, 5-year warrants in the
Company with an exercise price of 1.0 pence.
The Vega Wells, in aggregate, produced an average of 26 barrels of oil per day (net to the interest of Vega) in January, February and
March 2024. As of the effective date the Sneed 415 was producing with the Thompson 7330 and 7331 shut-in awaiting completion
of a new tank battery.
The Board views JKT and Vega as the foundation of its strategy to build ADM into a cash flow positive business.
The Company’s legacy investment is in the Nigerian offshore licence OML 113 and to date the Company has been involved with
maintaining and progressing its investment in OML 113 together with the joint operators from the development stage through to
production. The Board has reviewed the OML 113 investment and, given the focus on cash generative businesses in the USA and
the substantial capital requirements necessary to progress its interest in OML 113, has elected to pursue alternatives to monetise
this interest.
•
Seek to understand and meet shareholder needs and expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. Shareholders
have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are
encouraged to attend the Company’s Annual General Meeting (“AGM”). Investors also have access to current information on the
Company through its website, www.admenergyplc.com and via Stefan Olivier, CEO who is available to answer investor relations
enquiries and can be contacted on Stefan@admenergyplc.com or hello@admenergyplc.com.
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admenergy plc
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 December 2023
•
Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the long-term success of the Company is reliant upon the efforts of its directors and employees, the
efforts and activities of the joint operation partners and upon their contractors, suppliers and regulators. The Board has put in place
a range of processes and systems to ensure that there is close Board oversight and contact with its key resources and relationships.
As an investing company, the Company recognises that it is likely further investment will be required as it develops its investment
portfolio. Accordingly, ensuring that the Company continually understands the requirements of shareholders in the context of the
broader developments in its sector of operation is extremely important.
The Company’s CEO is in regular dialogue with a number of the Company’s shareholders, and feedback from this contact is used to
shape subsequent communication with shareholders as a whole and the market more generally.
•
Embed effective risk management, considering both opportunities and threats, throughout the organisation
In addition to its other roles and responsibilities, the Audit and Compliance Committee (see composition details in Corporate
Governance section of website, www.admenergyplc.com,) is responsible to the Board for ensuring that procedures are in place, and
are being effectively implemented to identify, evaluate and manage the significant risks faced by the Company. Within the scope
of the annual audit, specific financial risks are evaluated in detail, including in relation to foreign currency, interest rates, liquidity
and credit.
In terms of investment appraisal, this process is usually led by the CEO and COO. The opportunities are then presented and discussed
by the Board as a whole. Where necessary, the Company will also involve third party experts in the overall appraisal process.
The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal
control. In addition, there are a range of Company policies that are reviewed at least annually by the Board. These policies cover
matters such as share dealing and insider legislation. The Board currently takes the view that an internal audit function is not
considered necessary or practical due to the size of the Company and the close day to day control exercised by the
Directors. However, the Board will continue to monitor the need for an internal audit function.
The annual review of internal control and financial reporting procedures did not highlight any issues warranting the introduction of
an internal audit function. It was concluded, given the current size and transparency of the operations of the Company, that an
internal audit function was not required.
As noted in the Strategic Report on pages 6-9, 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 comprised of Non-executive Chairman Oliver Andrews, CEO Stefan Olivier and Non-executive Directors Claudio Coltellini
Lord Henry Bellingham, and Dr Stefan Liebing. 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 page 9. Executive and non-
executive directors are subject to re-election intervals as prescribed in the Company’s Articles of Association. At each Annual General
Meeting, one-third of the Directors, who are subject to retirement by rotation shall retire from office. They can then offer
themselves for re-election. The letters of appointment of all directors are available for inspection at the Company’s registered office
during normal business hours.
The Directors’ receive fees for their services as directors which are approved by the Board, being mindful of the time commitment
and responsibilities of their roles and of current market rates for comparable organisations and appointments.
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admenergy plc
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 December 2023
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Board meets as regularly as necessary. It has established an Audit and Compliance Committee and a Remuneration Committee,
particulars of which appear hereafter. Appointments to the Board are made by the Board as a whole and so the Company has not
created a Nominations Committee.
The Board retains full control of the Company with day-to-day operational control delegated to the CEO and other Directors.
•
Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
All members of the Board bring either relevant sector experience or public market’s experience which the Company considers to be
fundamentally important in its chosen area of operation and investment appraisal 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 page 9.
•
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Internal evaluation of the Board, its Committees and individual directors is important and will develop as the Company grows in the
future. The expectation is that Board reviews will be undertaken on an annual basis to determine the effectiveness and performance
in various areas as well as the directors’ continued independence
•
Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and
that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly
impact all aspects of the Company as a whole. Therefore, the importance of sound ethical values and behaviour is crucial to the
ability of the Company to successfully achieve its corporate objectives. The Board places great importance on this aspect of
corporate life and seeks to ensure that this flows through all that the Company does. The Board assessment of the culture within
the Company at the present time is one where there is respect for all individuals, open dialogue within the Company and a
commitment to best practice.
The Company has also adopted an anti-bribery policy which is clearly set out on the Company’s website.
•
Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board schedule provides for six board meetings per annum and, in addition, meets ad-hoc as required. Notwithstanding the
above, the Board and its Committees receive appropriate and timely information prior to each meeting; a formal agenda is produced
for each meeting, and Board and Committee papers are distributed several days before meetings take place. Any Director may
challenge Company proposals and decisions are taken democratically after discussion. Any Director who feels that any concern
remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated
to all Directors. Any specific actions arising from such meetings are agreed by the Board or relevant Committee and then followed
up by the Company’s management.
The Audit and Compliance Committee monitors the integrity of financial statements, oversees risk management and control, and
reviews external auditor independence. It also ensures that the Company is compliant with its relevant regulatory requirements.
The Non-executive Chairman has overall responsibility for corporate governance and in promoting high standards throughout the
group. He leads and chairs the Board, ensuring that committees are properly structured and operate with appropriate terms of
reference, ensures that performance of individual directors, the board and its committees are reviewed on a regular basis, leads in
the development of strategy and setting objectives, and oversees communication between the group and its shareholders.
The Executive Directors are responsible for implementing and delivering the strategy and operational decisions agreed by the
board, making operational and financial decisions required in the day-to-day operation of the group, providing executive leadership
to managers, championing the group’s core values and promoting talent management.
The Non-executive Directors contribute independent thinking and judgement through the application of their external experience
and knowledge, scrutinise the performance of management, provide constructive challenge to the executive directors and ensure
that the group is operating within the governance and risk framework approved by the Board.
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admenergy plc
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 December 2023
The Board has approved the adoption of the QCA Code as its governance framework against which this statement has been prepared
and will monitor the suitability of this code on an annual basis and revise its governance framework as appropriate as the group
evolves.
•
Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other
relevant stakeholders
The Company communicates with shareholders through its period announcement, the Annual Report and Accounts, full-year and
half-year announcements, the AGM and one-to-one meetings with large existing or potential new shareholders. A range of
corporate information (including all Company announcements and presentations) is also available to shareholders, investors and
the public on the Company’s corporate website, www.admenergyplc.com.
The Board is committed, where practicable, to developing and applying high standards of corporate governance appropriate to the
Company’s size and stage of development. The Board seeks to apply where appropriate the QCA Code as devised by the Quoted
Companies Alliance.
BOARD STRUCTURE
The Board has four directors, three of whom are non-executive. The Board is responsible for the management of the business of
the Company, setting its strategic direction and establishing appropriate policies. It is the Directors’ responsibility to oversee the
financial position of the Company and monitor its business and affairs, on behalf of the shareholders, to whom they are accountable.
The primary duty of the Board is to act in the best interests of the Company at all times. The Board also addresses issues relating to
internal controls and risk management. The non-executive directors bring a wide range of skills and experience to the Company, as
well as independent judgment on strategy, risk and performance. The independence of each non-executive director is assessed at
least annually, and all of the non-executive directors are considered to be independent at the date of this report.
The roles of the Chairman and CEO are separate, with their roles and responsibilities clearly divided and recorded. A summary of
their roles is as follows:
The Chairman is responsible for leadership of the Board, ensuring its effectiveness and setting its agenda. The Chairman facilitates
the effective contribution and performance of all Board members whilst identifying any development needs of the Board. He also
ensures that there is sufficient and effective communication with shareholders to understand their issues and concerns.
The CEO is responsible for executing the strategy agreed by the Board and developing the Group objectives through leadership of
the senior executive team. He will recommend to the Board any investment or new business opportunities which meet this strategy.
He also ensures that the Group’s risks are adequately addressed and appropriate internal controls are in place. The CEO is
responsible for meeting with shareholders and ensuring effective communication.
ATTENDANCE AT MEETINGS
It is expected that all Directors attend Board and relevant Committee meetings, unless they are prevented from doing so by prior
commitments, and that all Directors will attend the AGM.
During the year the Board met 8 times and all the Directors attended the meetings.
BOARD COMMITTEES
Remuneration Committee
The Remuneration Committee consists of Lord Henry Bellingham (Committee Chairman) and Dr Stefan Liebing. 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 regarding the levels of remuneration and benefits.
Remuneration Committee Report
On behalf of the Board, I am pleased to present the Remuneration Committee report for the financial period ended 31 December
2023. This report sets out the activities of the Remuneration Committee during 2023.
The Committee met twice during the year to determine the remuneration arrangements of the Directors and senior employees.
Remuneration policy
The Committee aims to ensure that total remuneration is set at an appropriate level for the Group and its operations. The objectives
and core principles of the remuneration policy are to:
•
ensure remuneration levels support the Group’s strategy;
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admenergy plc
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 December 2023
•
ensure that there is an appropriate link between performance and reward;
•
ensure alignment of Directors, senior management and shareholder interests;
•
ensure that long-term incentives are linked to shareholder return;
•
enable the Group to recruit, retain and motivate individuals with the skills, capabilities and experience to achieve its
objectives; and
•
strengthen teamwork by enabling all employees to share in the success of the business.
There are four elements of the remuneration package for Executive Directors and senior management:
•
basic annual salary;
•
benefits in kind;
•
discretionary annual bonus; and
•
long-term incentive plan.
Audit Committee
The Audit Committee consisted of Richard Carter (Committee Chairman) and Dr Stefan Liebing during 2023. Stefan Olivier replaced
Richard Carter as the committee chairman in 2024. The Audit Committee met twice in 2023 to consider the annual and interim
financial statements and the audit plan. The Audit Committee is responsible for ensuring that appropriate financial reporting
procedures are properly maintained and reported upon, reviewing accounting policies and for meeting the auditors and reviewing
their reports relating to the financial statements and internal control systems.
Audit Committee Report
On behalf of the Board, I am pleased to present the Audit Committee report for the financial period ended 31 December 2023. This
report sets out the activities of the Audit Committee during 2023.
The Audit Committee is governed by terms of reference which are agreed by the Board and subject to annual review.
Principal responsibilities of the committee:
•
Ensuring the financial performance of the Group is properly reviewed, measured and reported;
•
Monitoring the quality and adequacy of internal controls and internal control systems implemented across the Group;
•
Receive and review reports from the Group’s management and auditors relating to the interim and annual accounts;
•
Reviewing risk management policies and systems;
•
Advising on the appointment, re-appointment and remuneration of independent external auditors, besides scheduling
meetings with external auditors independent of management for discussions and reviews; and
•
Reviewing and monitoring the extent and independence of non-audit services rendered by external auditors.
Areas of focus during 2023
The Committee met twice in 2023 to execute its responsibilities. Meetings focussed on audit planning, risk management, internal
controls and the approval of the interim and final results including the key judgements associated with acquisition accounting, asset
impairment review assumptions and calculations, creditor completeness reviews and the going concern requirements and
statement.
Internal controls and risk
The Board assigns to the Committee the responsibility of monitoring and improving the Group’s internal controls governing the
finances of the business. The system of internal controls is vital in managing the risks that face the Group and safeguarding
shareholders’ interests.
Audit Process
The Committee reviews the findings of the external auditors and then approves the scope of work to be undertaken for the next
financial reporting year, including the associated audit fees. In addition, a review of the effectiveness of the external audit process
is undertaken and an annual assessment of the external auditor’s independence is made.
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admenergy plc
CHAIRMAN’S CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 December 2023
COMPANY CULTURE AND ETHICS
The Board of Directors seeks to embody and promote a corporate culture that is based on sound ethical values and behaviours. A
culture of ethics and compliance is at the core of a strong risk management program.
The Board of Directors of ADM Energy plc has adopted this code of ethics, to promote honest and ethical conduct, including the
ethical handling of actual or apparent conflicts of interest; promote the full, fair, accurate, timely and understandable disclosure of
the Company’s financial results in accordance with applicable disclosure standards; promote compliance with applicable
governmental laws, rules and regulations; and deter wrongdoing.
Directors’ Statement under Section 172 (1) of the Companies Act 2006
The Section 172 (1) of the Companies Act obliges the Directors to promote the success of the Company for the benefit of the
Company’s members as a whole.
The section specifies that the Directors must act in good faith when promoting the success of the Company and in doing so have
regard (amongst other things) to:
a)
the likely consequences of any decision in the long term;
b)
the interests of the Company’s employees;
c)
the need to foster the Company’s business relationship with suppliers, customers and others;
d)
the impact of the Company’s operations on the community and environment;
e)
the desirability of the Company maintaining a reputation for high standards of business conduct; and
f)
the need to act fairly as between members of the Company.
The Directors believe that during the year they have acted in the way most likely to promote the success of the Company for the
benefit of its members as a whole and have adhered to the requirements set out above that are applicable to the Company given
its scope of operations. Through its financing activities, the Board has ensured that the Company is sufficiently capitalised and has
cash resources for its requirements, to ensure that the Company has a viable operating plan for the long term. Given the nature of
the Company’s business, it has very few employees and the majority are themselves directors. The Board recognises that the
Company’s employees are, nevertheless, critical to the success of the Company and takes steps to ensure that the interests of
employees are protected. The Company does not deal directly with customers or suppliers in relation to its oil and gas field interests,
save for its relationship with the operator for the OML 113 licence. The Company acknowledges the importance of maintaining good
relations with its suppliers and aims to settle all invoices in a timely manner. The Company’s approach to its responsibilities in
respect of the impact of its operations on the community and environment is set out in “Our Sustainable Approach” on page 10.
Lord Henry Bellingham
Non-Executive Chairman
30 December 2024
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admenergy plc
REPORT ON DIRECTORS’ REMUNERATION
FOR THE PERIOD ENDED 31 December 2023
REMUNERATION
The remuneration of the Directors has been fixed by the Board as a whole. The Board seeks to provide appropriate reward for the
skill and time commitment required so as to retain the right calibre of director at a cost to the Group, which reflects current market
rates.
The Board is responsible for the overall remuneration package for the Executive and Non-executive Directors. The Company’s
remuneration policy is set out on page 16.
DIRECTORS’ EMOLUMENTS
Details of the remuneration package of each Director for the year are set out below:
2023
2023
2023
2023
2022
Fees and
emoluments
Pension
contributions
Options
and warrants
Total
remuneration
Total
remuneration
Director
£’000
£’000
Number
£’000
£’000
Stefan Oliver (Appointed 25 April
2023)
113
21,299,823
113
-
Claudio Coltellini (Appointed 25 April
2023, resigned 13 December 2024)
20
-
-
20
-
Lord Bellingham
19
-
4,348,714
19
29
Dr Stefan Liebing
15
-
3,194,973
15
25
Directors who left during year:
Oliver Andrews (Resigned 15
December 2023)
-
-
4,348,714
-
60
Manuel Lamboley (Resigned 25 April
2023)
1
-
-
1
25
Richard Carter (Resigned 15 December
2023)
85
19
10,649,911
104
201
Osamede Okhomina (resigned 31
October 2022)
-
-
-
-
126
253
19
43,842,135
272
466
PENSIONS
Pension contributions of £19,000 were accrued for in respect of the directors for the year ended 31 December 2023 (2022: £81,000).
On behalf of the Board.
Lord Bellingham
Non-Executive Chairman
30 December 2024
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admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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 2023 which comprise the group income statement and statement of comprehensive
income, group and company statements of financial position, group and company statements of changes in equity,
group and company statements of cashflows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and 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 2023
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 applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting
Council’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 relating to going concern
We draw attention to note 2 in the financial statements, which discloses that the Group and Company are considered
to be a going concern by management. We note that the primary source of income generated in recent years, via its
partnership in the OML 113 license, was paused during 2022 as part of a suspension of production at Aje. This pause
was to upgrade and increase the capacity and production capability of the asset in line with the development plans.
It is not known at this stage if or when this asset will become income generating again.
Management have subsequently engaged in new investment opportunities, this includes the acquisitions in the
current year of oil generating assets in the US, which as of the date of the approval of these financial statements are
beginning to generate some modest returns. However, at present the Group remains heavily reliant on ongoing
additional funding to meet its liabilities as they fall due and this is expected to continue being the case well into 2025.
Due to the inherent uncertainty involved with the timings and amounts of obtaining such funding – added to the
inherent uncertainty with respect to the timings and amounts of income generated from investments held – these
events or conditions along with the other matters set out in note 2 indicate that a material uncertainty exists that
may cast significant doubt on the Group and Parent company’s ability to continue as a going concern.
The disclosure of material uncertainty in relation to going concern is further demonstrated by the directors shift in
focus on to cost control and cash flow management. There have been significant cashflow constraints faced by the
group during the year and post year end. As at 31 December 2023, the cash balance was £nil (2022: £25k), which
highlights the urgent requirement for external funding to meet day to day working capital requirements.
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admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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
acceptable levels of audit assurance gained from the following procedures in which we have:
•
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 understanding
as well as audit evidence obtained;
•
Considered the accuracy of forecasts produced by management by reference to key assumptions made, as
well as identifying specific elements of the forecasts that are critical for demonstrating that the business
remains a going concern, taking into account variances that arose;
•
Tested the mechanical integrity of the forecast model prepared by management by checking the accuracy
and completeness of the model, including challenging the appropriateness of estimates and assumptions
with reference to empirical data and external evidence;
•
Considered the key financial data of the group and company at year end and assessed the financial headroom
available by reference to ongoing cash commitments over a period of at least 12 months from the date of
the approval of these financial statements;
•
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;
•
Considered the funding facilities currently and potentially available to the business as well as reviewing the
associated covenants where applicable;
•
Specifically considered the willingness and ability of shareholders to continue to provide equity and debt
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 post year-end financial information, including performance of US oil generating assets and board
minutes and other events in order to further assess the performance, strength as well as the ability of the
business to settle liabilities as they fall due since the balance sheet date to the date of the approval of the
financial statements.
•
Reviewed the adequacy and completeness of the disclosure included within the financial statements in
respect of going concern.
Our responsibilities and the responsibility of the directors with respect to going concern are described in the relevant
sections of the report.
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 company, the
accounting processes and controls, and the industry in which they operate.
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admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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
Level of assurance
ADM Energy PLC
Full statutory audit
P R Oil & Gas Nigeria Limited
Substantial audit procedures
ADM Asset Holdings Limited (Dormant)
Limited assurance review
ADM Energy Services Limited (Dormant)
Limited assurance review
ADM 113 Limited
Limited assurance review
Geo Estratos MXOil, SAPI de CV (Dormant)
Limited assurance review
K.O.N.H. (UK) Limited (Dormant)
Limited assurance review
ADM 113 One Limited (Dormant)
Limited assurance review
ADM Energy USA Inc (Dormant)
Limited assurance review
Blade Oil V, LLC
Substantial audit procedures
Coverage overview
Group revenue
(£’000s)
Group
profit/(loss)
before tax
(£’000s)
Group gross
assets (£’000s)
Group net assets
(£’000s)
Totals at 31
December 2023:
£Nil
(£15,031)
£6,163
(£1,924)
Full statutory audit
and substantial audit
procedures
£Nil
(£15,031)
£6,163
(£1,924)
Limited audit
procedures
£Nil
£Nil
£Nil
£Nil
Our application of materiality
Group financial statements
Parent company financial
statements
Materiality
£123,300 (2022: £224,200)
£37,400 (2022: £198,400)
Basis for determining materiality
Capped at 2% of gross assets
Capped at 2% of gross assets
Rationale for benchmark applied
The group's principal activity of
that of investing in the natural
resources sector. To this end the
business is highly asset focused.
Therefore, a benchmark for
materiality of the Gross Assets of
the group is considered to be
appropriate.
The parent company’s business
is highly asset focused.
Therefore, a benchmark for
materiality of the Gross Assets
of the company is considered to
be appropriate. This is inline
with the group benchmark.
Performance materiality
£86,300 (2022: £156,900)
£26,180 (2022: £138,900)
Basis for determining performance
materiality
70% of materiality
70% of materiality
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
23
admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Rationale for performance
materiality applied
On the basis of our risk
assessments, together with our
assessment of the Group’s overall
control environment and going
concern status, our judgement was
that performance materiality was
70% of our financial statement
materiality. In assessing the
appropriate level, we consider the
nature, the number and impact of
the audit differences identified in
the previous year’s audit.
On the basis of our risk
assessments, together with our
assessment of the Company’s
overall control environment and
going concern status, our
judgement was that
performance materiality was
70% of our financial statement
materiality. In assessing the
appropriate level, we consider
the nature, the number and
impact of the audit differences
identified in the previous year’s
audit.
Triviality threshold
£6,200 (2022: £11,200)
£1,900 (2022: £9,900)
Basis for determining triviality
threshold
5% of materiality
5% of materiality
We reported all audit differences found in excess of our triviality threshold of £6,200 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 example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. 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) that 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. Please refer to the Material uncertainty relating to going
concern paragraph of this report to understand the key audit risk identified with respect to the Group’s going concern.
This is not a complete list of all risks identified by our audit.
Valuation/impairment of intangible assets of £5.08m (2022: £17.9m) and investment in subsidiaries of Nil
(2022: £12.3m)
Significance and nature of key risk
Intangible assets relate to the Group’s
capitalised development costs and
proportionate interest in the production
How our audit addressed the key risk
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.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
24
admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
assets covered under the joint operating
agreement.
Investment in subsidiaries relate to the
Group’s interest in the ADM 113’s sole
asset, which is its wholly owned
subsidiary, P R Oil & Gas Nigeria Limited
(“PROG”), a Nigerian registered company
which holds a 9.2% revenue interest in
the OML 113 licence, offshore Nigeria,
which includes the Aje Field ("Aje"),
where oil production commenced in May
2016. During the year, the investment
was impaired to nil.
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 considered the Group’s investment in subsidiaries in
accordance with the requirements of IFRS 3, including the
examination of relevant supporting evidence to gain comfort over
the balance recognised.
We have obtained management’s assessment of the impairment
of intangibles and the investment in subsidiaries. In analysing this
we have considered external factors, such as the consideration
received for transfer of interest in the license between other
partners, 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 Audit Committee
Following our audit procedures, we concluded that material impairments were required with respect to the
development costs related to the Aje investment capitalised in the consolidated statement of financial position
of £12.6m. We also concluded that an impairment was required to the related investment in the in P R Oil &
Gas Nigeria Limited subsidiary of £12.3m. Following these adjustments, we have no concerns over the material
accuracy of the remaining intangible asset values recognised in the financial statements.
Valuation of liabilities in P R Oil & Gas Nigeria Limited £1.3m (2022: £2.7m)
Significance and nature of key risk
There are cost sharing obligations
relating to the Group’s interest in the
OML 113 License, as specified in the joint
operating agreement.
These liabilities have increased with the
acquisition of additional interest in the
OML 113 license by the Group in recent
years.
There is a risk that the expense share
reported to the group to be accrued for
is materiality understated.
How our audit addressed the key risk
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
production of accurate financial reports for partners in the OML
113 License.
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 Audit Committee
Following our audit procedures, we concluded that an adjustment of £1.4m was required to the OML 113
license liabilities. Following these adjustments, we have no concerns over the material accuracy of liabilities
relating to OML 113 license operations recognised in the financial statements.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
25
admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; an
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the Group and parent company and its environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement (set out on page 10), the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
26
admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
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 revenue or reduce expenditure, management
bias in accounting estimates and judgemental areas of the financial statements such as the valuation of intangible
assets. Audit procedures performed by the group engagement team included:
•
Detailed discussions were held with management to identify any known or suspected instances of non-
compliance with laws and regulations.
•
Identifying and assessing the design effectiveness of controls that management has in place to prevent and
detect fraud.
•
Challenging assumptions and judgements made by management in its significant accounting estimates,
including assessing the capabilities of management to consider sufficient impairment criteria in making their
assessment over the value of intangible assets.
•
Performing analytical procedures to identify any unusual or unexpected relationships, including related party
transactions, that may indicate risks of material misstatement due to fraud.
•
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 business.
•
Reading minutes of meetings of those charged with governance and reviewing correspondence with relevant
tax and regulatory authorities.
•
Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting
the transactions.
•
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 by
management.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the
financial statements, as we will be less likely to become aware of instances of non-compliance.
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
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
27
admenergy plc
INDEPENDENT AUDITOR REPORT
TO THE SHAREHOLDERS OF ADM ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
sufficient 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, intentional 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.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
•
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 conditions 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 modify 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 continue as a
going concern.
•
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, 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
responsible 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’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date: 30 December 2024
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
28
admenergy plc
GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 December 2023
2023
2022
Note
£’000
£’000
Continuing operations
Revenue
3
-
662
Other operating losses
(210)
(369)
Administrative expenses
(1,575)
(1,723)
Other gains
9
1,020
-
Impairment
10
(16,843)
(576)
Operating loss
4
(17,608)
(2,006)
Finance costs
5
(191)
(116)
Loss on ordinary activities before taxation
(17,799)
(2,122)
Taxation
7
-
-
Loss for the year
(17,799)
(2,122)
Other Comprehensive income:
Exchange translation movement
(615)
1,339
Total comprehensive income for the year
(18,414)
(783)
Basic and diluted loss per share:
8
From continuing and total operations
(5.0)p
(0.8)p
The notes on pages 34 to 58 form part of these financial statements.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
29
admenergy plc (Company Number: 05311866)
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 December 2023
GROUP
COMPANY
2023
2022
2023
2022
Notes
£’000
£’000
£’000
£’000
NON-CURRENT ASSETS
Intangible assets
10
357
17,899
-
-
Investment in subsidiaries
11
-
-
668
12,343
Investment in associates
12
1,062
-
1,062
-
1,419
17,899
1,730
12,343
CURRENT ASSETS
Investments held for trading
13
-
28
-
28
Inventory
14
-
36
-
-
Trade and other receivables
15
18
22
18
17
Cash and cash equivalents
16
-
25
-
25
18
111
18
70
CURRENT LIABILITIES
Trade and other payables
17
2,273
2,240
2,235
2,207
Convertible loans
18
427
-
427
-
2,700
2,240
2,662
2,207
NET CURRENT LIABILITIES
(2,682)
(2,129)
(2,644)
(2,137)
NON-CURRENT LIABILITIES
Other borrowings
18
638
287
638
287
Other payables
17
1,586
2,718
282
-
Decommissioning provision
19
1,621
1,557
-
-
3,845
4,562
920
287
NET ASSETS
(5,108)
11,208
(1,834)
9,919
EQUITY
Share capital
20
13,072
11,194
13,072
11,194
Share premium
20
38,236
38,090
38,236
38,090
Other reserves
21
1,036
962
1,036
962
Currency translation reserve
15
630
-
-
Retained deficit
(57,467)
(39,668)
(54,178)
(40,327)
Equity attributable to owners of the Company and total
equity
(5,108)
11,208
(1,834)
9,919
The notes on pages 34 to 58 form part of these financial statements.
The financial statements were approved by the Board and ready for issue on 30 December 2024.
Stefan Olivier
Chief Executive Officer
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
30
admenergy plc
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2023
Share
capital
Share
premium
Exchange
translation
reserve
Other
reserves
Retained
deficit
Total
equity
£’000
£’000
£’000
£’000
£’000
£’000
At 31 December 2021
10,267
38,014
(709)
960
(37,546)
10,986
Loss for the year
-
-
-
-
(2,122)
(2,122)
Exchange translation movement
-
-
1,339
-
-
1,339
Total comprehensive income /
(expense) for the year
-
-
1,339
-
(2,122)
(783)
Issue of new shares
927
134
-
-
-
1,061
Share issue costs
-
(56)
-
-
-
(56)
Issue of warrants
-
(2)
-
2
-
-
Settlement of convertible loans
-
-
-
(19)
19
-
At 31 December 2022
11,194
38,090
630
962
(39,668)
11,208
Loss for the year
-
-
-
-
(17,799)
(17,799)
Exchange translation movement
-
-
(615)
-
-
(615)
Total comprehensive income /
(expense) for the year
-
-
(615)
-
(17,799)
(18,414)
Issue of new shares
1,878
146
-
-
-
2,024
Issue of options & warrants
-
-
-
33
-
33
Issue of convertible loans
-
-
-
41
-
41
At 31 December 2023
13,072
38,236
15
1,036
(57,467)
(5,108)
The notes on pages 34 to 57 form part of these financial statements.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
31
admenergy plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2023
Share
capital
Share
premium
Other
reserves
Retained
deficit
Total
equity
£’000
£’000
£’000
£’000
£’000
At 31 December 2021
10,267
38,014
960
(38,037)
11,204
Loss for the period and total comprehensive
expense
-
-
-
(2,290)
(2,290)
Issue of new shares
927
134
-
-
1,061
Share issue costs
-
(56)
-
-
(56)
Issue of warrants
-
(2)
2
-
-
Settlement of convertible loans
-
-
(19)
19
-
At 31 December 2022
11,194
38,090
962
(40,327)
9,919
Loss for the period and total comprehensive
expense
-
-
-
(13,851)
(13,851)
Issue of new shares
1,878
146
-
-
2,024
Issue of warrants
-
-
33
-
33
Settlement of convertible loans
-
-
41
-
41
At 31 December 2023
13,072
38,236
1,036
(54,178)
(1,834)
The notes on pages 34 to 57 form part of these financial statements.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
32
admenergy plc
GROUP AND COMPANY STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2023
GROUP
COMPANY
Note
2023
2022
2023
2022
£’000
£’000
£’000
£’000
OPERATING ACTIVITIES
Loss for the period
(17,799)
(2,122)
(13,851)
(2,290)
Adjustments for:
Warrants issued in settlement of fees
22
10
-
10
-
Finance costs and interest
5
184
116
184
116
FX on developments (intangibles)
10
420
-
-
-
Impairment of investment
13/10
29
576
12,370
576
Depreciation
57
-
-
-
Other amounts written off
54
-
54
-
Share based payments
22
18
-
18
-
Gains on settlement
9
(1,521)
-
(65)
-
Loss on disposal of leases
9
501
-
-
-
Shares issued as incentives
127
-
127
-
Impairment of intangibles
10
16,843
65
-
-
Decommissioning provision
19
57
138
-
-
Operating cashflow before working capital changes
(1,020)
(1,227)
(1,153)
(1,598)
Decrease/(increase) in receivables
15
-
108
-
113
Decrease in inventories
14
36
-
-
-
Increase/(decrease) in trade and other payables
17
258
138
362
522
Net cash outflow from operating activities
(726)
(981)
(791)
(963)
INVESTMENT ACTIVITIES
Acquisition of subsidiary
(8)
-
(8)
-
Loans to subsidiary operation
-
-
-
(8)
Net cash outflow from investment activities
(8)
-
(8)
(8)
FINANCING ACTIVITIES
Issue of ordinary share capital
20
-
1,061
-
1,061
Share issue costs
20
-
(56)
-
(56)
Proceeds from convertible loan note
18
450
-
450
-
Repayment of borrowings
(20)
(328)
(20)
(328)
Proceeds from borrowings
343
210
344
210
Net cash inflow from financing activities
773
887
774
887
Net increase/(decrease) in cash and cash equivalents
from continuing and total operations
39
(94)
(25)
(84)
Exchange translation difference
(64)
9
-
-
Cash and cash equivalents at beginning of period
25
110
25
109
Cash and cash equivalents at end of period
16
-
25
-
25
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
33
admenergy plc
GROUP AND COMPANY STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2023
Major non cash transactions
The notes on pages 34 to 58 form part of these financial statements.
Non-cash investing and financing activities
Shares in consideration for the investment in Blade Oil V
188,576
-
188,576
-
Shares in conversion of outstanding contractual liabilities
683,117
-
683,117
-
Shares in settlement of certain outstanding trade and
other creditors
291,145
-
291,145
-
Share options to Directors and employees
17,626
-
17,626
-
Investor warrants
1,695
-
1,695
-
Incentive warrants
679
-
679
-
Warrants in consideration for loan settlement
13,212
-
13,212
-
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
34
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
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 investing 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 of the report and accounts
on page 3.
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the company is not presented as
part of these financial statements. The Company’s total comprehensive loss for the financial year was £13.9 million (2022:
£2.3 million).
2
PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies 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 and Parent Company financial statements have been prepared in accordance with
International Financial Reporting Standards, International Accounting Standards and interpretations issued by the
International Accounting Standards Board (IASB) 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 2023. The comparative figures relate
to the year ended 31 December 2022. The financial statements are presented in pounds sterling (£) which is the functional
currency of the Group.
An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and which have not been
adopted early by the Group are presented below under ‘Statement of Compliance’.
GOING CONCERN
The Group and Company financial statements have been prepared under the going concern assumption, which presumes
that the Group and Company will be able to meet its obligations as they fall due for the foreseeable future.
The group made a loss before tax of £17,799,000, had net current liabilities of £2,682,000, had negative equity of £5,108,000
and had net operating cash outflow of £726,000 for the year. In assessing whether the going concern assumption is
appropriate, the Directors take into account all available information for the foreseeable future, in particular for the twelve
months from the date of approval of the financial statements. This information includes growing revenue opportunities,
management prepared cash flows forecasts, the group’s current cash balances, the group’s existing and projected monthly
running costs and need for further fundings.
Following this assessment, the directors have reasonable expectation that the group can secure adequate liquidity to
continue for the foreseeable future through further funding. The Directors therefore have made an informed judgement at
the time of approving the financial statements that there is a reasonable expectation that the group has adequate resources
to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of
accounting in preparing the financial statements.
Whilst the directors are confident, there is no absolute guarantee that such funding and payment plan would be secured
within the required timelines and therefore indicates that a material uncertainty exists that may cast significant doubt on
the group’s ability to continue as a going concern and, therefore the group and company may be unable to realise their
assets and discharge their liabilities in the normal course of business. The auditors have included material uncertainty in
relation to going concern in the audit opinion.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
35
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
STATEMENT OF COMPLIANCE
The financial statements of the Group and Company have been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006.
The Group’s and Company’s financial statements for the year ended 31 December 2023 were approved and authorised
for issue by the Board of Directors on 30 December 2024 and the Statements of Financial Position were signed on
behalf of the Board by Stefan Olivier.
Both the Parent Company financial statements and the Group financial statements give a true and fair view and have
been prepared and approved by the Directors in accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006.
New standards, amendments and interpretations adopted by the Company.
The following new standards have come into effect this year however they have no impact on the Group:
Standard
Description
Effective date
IAS 1 amendments
Non-current Liabilities with Covenants; and Classification of Liabilities
as Current or Non-current
1 January 2024
IFRS 17
IFRS 17 will replace IFRS 4 Insurance Contracts,
1 January 2024
Amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
1 January 2024
Amendments to IAS 12
Introduces an exception to the “initial recognition exemption” when
the transaction gives rise to equal taxable and deductible temporary
differences.
1 January 2024
The following amendment is effective for the period beginning 1 July 2024:
Standard
Description
Effective date
IAS 21 (Amendments)
Lack of Exchangeability
1 January 2025
There are no IFRS’s or IFRIC interpretations that are not yet effective that would be expected to have a material impact on
the Company or Group.
KEY ESTIMATES AND ASSUMPTIONS
Estimates and assumptions used in preparing the financial statements are reviewed on an ongoing basis and are based
on historical experience and various other factors that are believed to be reasonable under the circumstances. The results
of these estimates and assumptions form the basis of making judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Judgement also applies in determining whether costs associated with
contingent liabilities can be reliably estimated or not and the extent to which it is appropriate to make disclosure in this
area.
USEFUL ECONOMIC LIFE OF INTANGIBLE ASSETS
The Group’s intangible assets relate to oil field development expenditure which is considered capital in nature. Intangible
assets are amortised over their useful economic life in accordance with the expected pattern of consumption of the
benefits arising from the Group’s interest in OML 113 license (the Unit of Production method). The timing and pattern of
production represents an estimation made with reference to according research performed by third parties and the
Directors assessment of the timing and level of activity over the life of developed assets.
Note 25 summaries the acquisition of Blade Oil V, LLC and the return of some of the leases back to the seller. This resulted
in Blade Oil V, LLC’s remaining lease, Altoona, being recognised as an exploration asset under intangibles. Intangible assets
such as this are with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses, £280,000 (2022: nil)
IMPAIRMENT OF INTANGIBLE ASSETS
Note 10 summarises the cumulative cost less amortisation of the 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
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36
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
value of the Group’s proportionate share of the Aje fixed assets (which as a cash generating unit is represented by the
intangible asset relating to the cumulative cost of its acquisition and funding of its interest in the Aje Field) and have
determined that it is appropriate to impair the asset by £12,619,000 (2022: nil) down to nil as oil production has ceased
here. This therefore resulted in the investment in PR Oil & Gas Nigeria Ltd being impaired to nil as this company holds
the Aje Field.
CONTINGENT CONSIDERATION
Note 26 summaries the contingent consideration of £765,000 (2022: nil) recognised as part of the purchase price of Blade
Oil V, LLC. The assessment of contingent considerations 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.
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 correspondence with parties relevant to the
contingent liability and make their own assessment of whether they have sufficient information from such
correspondence to reliably predict an outcome.
INVESTMENTS HELD FOR TRADING
Investments held for trading are held at fair value through profit and loss. At both reporting dates they are considered to
be Level 3 investments whereby their valuation is determined by whole or in part using valuation techniques based on
assumptions that are not supported by observable prices in comparable market transactions in the same instrument or
similar observable data.
The Directors regularly review the valuation of such investments against both ongoing results of the business in which it
has made investments and the price at which any further investment has taken place if such investment is considered to
give sufficient and appropriate indication of fair value. The investment in Superdielectrics Ltd has been impaired by
£28,000 (2022: nil) to nil during the year.
DECOMMISSIONING PROVISION
Decommissioning costs will be incurred by the Group, in accordance with the terms of the Joint Operating Agreement, at
the end of the operating life of the production facilities associated with the Group’s interest in OML 113. The Group
assesses its retirement obligation at each reporting date. The ultimate asset retirement costs are uncertain and cost
estimates can vary in response to many factors, including changes to relevant legal requirements, the emergence of new
restoration techniques or experience at other production sites. The expected timing, extent and amount of expenditure
can also change, for example in response to changes in reserves or changes in laws and regulations or their interpretation.
Therefore, significant estimates and assumptions are made in determining the provision for asset retirement obligation.
As a result, there could be significant adjustments to the provisions established which would affect future financial
results. The provision at reporting date represents management’s best estimate of the present value of the future asset
retirement costs required using an annual discount rate of 10%. The provision during the year increased by £147,000,
(2022: £138,000).
SHARE BASED PAYMENTS
The Group has made awards of options and warrants over its unissued share capital to certain Directors, employees and
professional advisers as part of their remuneration.
The fair value of options and warrants are determined by reference to the fair value of the options and warrants granted,
excluding the impact of any non-market vesting conditions. In accordance with IFRS 2 ‘Share Based Payments’, the Group
has recognised the fair value of options and warrants, calculated using the Black-Scholes option pricing model. The
Directors apply this model on the basis that there are considered to be no performance obligations included within these
issued options. The share based payment charge for the year was £33,211 (2022: £2,000). The Directors have made
assumptions particularly regarding the volatility of the share price at the grant date in order to reach a fair value. Further
information is disclosed in Note 21.
GOING CONCERN
See note 2, Going Concern accounting policy.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
37
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
ACCOUNTING POLICIES
REVENUE RECOGNITION
The Group follows IFRS 15. The standard provides a single comprehensive model for revenue recognition in a 5
step process.
1. Identify all contract(s) with customers and ensure
that these are clearly documented.
The group hold a signed agreement confirming their
interest in the OML 113 license. These details the
revenue and cost sharing arrangements in place.
2. Identify separate performance obligations in a
contract. Will a contract need to be ‘unbundled’ into
two or more components? Alternatively, will two or
more contracts need to be ‘bundled’ into a single
overall obligation?
There is no performance obligation as such on ADM’s
part. The contract in place gives them legal rights to
their share of the revenues in the operations relating
to the OML 113 license in the financial year as
calculated by the 3rd party operations and
management company.
3. Determine the transaction price.
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.
4. Is revenue recognised at a single point in time, or
over a period of time?
Revenue theoretically accrues over the course of the
financial period based on the performance of the
asset. In practice this revenue 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 3rd 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 3rd party billing statement.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
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admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
TAXATION
UK taxes
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities
relating to the current or prior reporting period, that are unpaid at the statement of financial position date. They
are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based
on the taxable result for the year. All changes to current tax assets or liabilities are recognised as a component of
tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the
comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their
respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or
accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the
Group are assessed for recognition as deferred tax assets.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the
comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their
respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax
or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to
the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is
probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the statement of financial position date.
Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income
statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities
that is charged directly to equity are charged or credited directly to equity.
Nigerian taxes
The Company’s subsidiary, P R Oil & Gas Nigeria Ltd operates offshore Nigeria and is subject to the tax regulations
of that country.
Current income tax assets and liabilities for current period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws are those that are enacted or substantially
enacted at the reporting date. The Company engaged in exploration and production of crude oil (upstream
activity). Therefore, its profits are taxable under the Petroleum Profit Tax Act.
US taxes
The Company’s subsidiary, ADM Energy USA Inc operates in the USA and is subject to the tax regulations of that
country.
Current income tax assets and liabilities for current period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws are those that are enacted or substantially
enacted at the reporting date. The Company engaged in exploration and production of crude oil (upstream
activity). Therefore, its profits are taxable under the relevant federal tax codes of the Internal Revenue Service as
well as under the relevant state tax codes of the State of California.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
39
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
INTANGIBLE ASSETS
Intangible assets relate to the Group’s capitalised Exploration & Evaluation (E&E) costs and proportionate
interest in the production assets of joint operations (development costs).
The share of development costs incurred on specific projects are capitalised when all the following conditions are
satisfied:
•
completion of the asset is technically feasible so that it will be available for use or sale
•
the Group intends to complete the asset and use or sell it
•
the Group has the ability to use or sell the asset
•
the asset will generate probable future economic benefits
•
there are adequate technical, financial and other resources to complete the development and to use or sell
the asset, and
•
the expenditure attributable to the asset during its development can be measured reliably.
Other development expenditure that does not meet these criteria is recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period. There were no development costs recognised as an expense during the year (2022: £Nil). The interest in
the Altoona lease has been recognised as an E&E asset on consolidation.
Intangible assets are amortised as the benefits associated with them are consumed.
IMPAIRMENT OF INTANGIBLE ASSETS
Proven oil and gas properties and intangible assets are reviewed annually for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The carrying value is compared against the expected recoverable amount of
the asset, generally by net present value of the future net cash flows, expected to be derived from
production of commercial reserves or consideration expected to be achieved through the sale of its
interest in an arms-length transaction, less any associated costs to sell. The cash generating unit
applied for impairment test purposes is generally the field and the Group’s interest in its underlying
assets, except that a number of field interests may be grouped together where there are common
facilities.
FINANCIAL ASSETS
Financial assets are recognised in the Group’s statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
The Group’s financial assets are classified into the following specific categories: ‘Investments
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, except for short-term receivables when
the recognition of interest would be immaterial.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
40
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
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
Financial Instruments Revaluation Reserve. Fair value measurements and techniques are set out in
the accounting policy on page 39 and referred to in Financial Assets Measured at Fair Value through
Profit and Loss. Financial Assets Revaluation Reserve is included in Other Reserves in Equity
INVESTMENTS HELD FOR TRADING
All investments determined upon initial recognition as held at fair value through profit or loss were designated as
investments held for trading. Investment transactions are accounted for on a trade date basis. Assets are de-recognised at
the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction
cost. The fair value of the financial instruments in the statement of financial position is based on the quoted bid price at the
statement of financial position date, with no deduction for any estimated future selling cost. Unquoted investments are
valued by the directors using primary valuation techniques such as recent transactions, last price at which shares have been
issued and net asset value. Changes in the fair value of investments held at fair value through profit or loss and gains and
losses on disposal are recognised in the consolidated statement of comprehensive income as “Net gains on investments”.
Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair
value in accordance with IFRS 9 Financial Instruments. This is either the bid price or the last traded price, depending on the
convention of the exchange on which the investment is quoted.
INVESTEMENTS IN ASSOCIATES
The Group accounts for investments in associates in accordance with IAS 28. An associate is an entity over which the Group
has significant influence but does not have control or joint control, typically evidenced by holding between 20% and 50% of
the voting power of the investee. Investments in associates are initially recognised at cost. Subsequently, the carrying
amount is adjusted to recognise the Group’s share of the associate’s post-acquisition profits or losses, and other
comprehensive income. The carrying amount of investments in associates is tested for impairment whenever there is an
indication that the investment may be impaired. Impairment losses are recognised in the statement of profit and loss.
INVENTORY
Inventory comprises stock of unsold oil in storage and is valued at the lower of cost and net realisable value.
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
The company has the following subsidiaries which were effectively dormant in the current and prior period and are
considered to be highly immaterial to the Group's financial statements. As such these subsidiaries have not been included
in the consolidated financial statements:
• Geo Estratos MXOil, SAPI de CV
• ADM Asset Holdings Limited
• ADM Energy Services Limited
• ADM 113 Limited BVI
• K.O.N.H. (UK) Limited
• ADM 113 One Limited
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
41
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
JOINT OPERATIONS (OML 113 OPERATING AGREEMENT)
The Group has a 9.2% profit share and 12.3% cost share in the OML 113 operating licence. The operating agreement for
OML 113 is a joint arrangement, with the fundamental decisions requiring unanimity between the partners. Other
decisions require a qualified majority decision. As no corporate entity exists the agreement cannot be considered to meet
the definition of a joint venture.
In relation to its interests in the OML 113 operations, the Group recognises:
•
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 deducting all of
its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
Equity comprises the following:
•
Share capital represents the nominal value of equity shares issued.
•
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction
costs associated with the issuing of shares are deducted from share premium, net of any related income tax
benefits.
•
Option reserve represents the cumulative cost of share based payments in respect of options granted.
•
Warrant reserve represents the cumulative cost of share based payments in respect of warrants issued.
•
Convertible loan note reserve represents the equity portion of convertible loan notes issued.
•
Currency translation reserve is used to recognise foreign currency exchange differences arising on translation of
functional currency to presentation currency.
Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.
FINANCIAL LIABILITIES
Financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the
contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the
income statement using the effective interest rate method.
The Group’s financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement
payments.
DECOMMISSIONING LIABILITY
A decommissioning liability is recognised when the Group has a present legal or constructive obligation as a result of past
events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the
amount of obligation can be made. A corresponding amount equivalent to the obligation is also recognised as part of the
cost of the related production plant and equipment. The amount recognised is the estimated cost of decommissioning,
discounted to its present value, using a discount rate of 10%. Changes in the estimated timing of decommissioning cost
estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to
production plant and equipment. The unwinding of the discount on the decommissioning provision will be included in the
income statement.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
42
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
CONTINGENT LIABILITIES
Contingent liabilities are possible obligations arising from past events whose existence will be confirmed by uncertain
future events that are not wholly within the control of the Group. Contingent liabilities also include obligations that are not
recognised because their amount cannot be measured reliably or because settlement is not probable.
Unless the possibility of an outflow of economic resources is remote a contingent liability is disclosed in the notes.
SHARE BASED PAYMENTS
Where share options are awarded, or warrants issued to employees, the fair value of the options/warrants at the date of
grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately,
the cumulative amount recognized over the vesting period is based on the number of options/warrants that eventually vest.
As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions
are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where warrants or options are issued for services provided to the Group, including financing, the fair value of the service is
charged to the statement of comprehensive income or against share premium where the warrants or options were issued
in exchange for services in connection with share issues. Where the fair value of the services cannot be reliably measured,
the service is valued using Black Scholes valuation methodology taking into consideration the market and non-market
conditions described above.
Where the share options are cancelled before they vest, the remaining unvested fair value is immediately charged to the
statement of comprehensive income.
FOREIGN CURRENCIES
The Directors consider Sterling to be the currency that most faithfully represents the economic effects of the underlying
transactions, events and conditions. The financial statements are presented in Sterling, which is the Group’s functional and
presentation currency.
Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of the transactions.
Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income
statement. Non-monetary items that are measured at historical costs in a foreign currency are translated at the exchange
rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated
into the functional currency using the exchange rates at the date when the fair value was determined.
SEGMENTAL REPORTING
A segment is a distinguishable component of the Group’s activities from which it may earn revenues and incur expenses,
whose operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about the
allocation of resources and assessment of performance and about which discrete financial information is available.
As the chief operating decision maker reviews financial information for and makes decisions about the Group’s investment
activities as a whole, the directors have identified a single operating segment, that of holding and trading in investments in
natural resources, minerals, metals, and oil and gas projects. The Directors consider that it would not be appropriate to
disclose any geographical analysis of the Group’s investments.
No segmental analysis has been provided in the financial statements as, for the period ending 31 December 2023, the
investment in OFX Technologies, Inc, is recorded on an equity basis and no material activity occurred related to the Blade
Oil V, LLC assets prior to the unwind of this transaction. Therefore, the Directors consider that the Group’s operations were
substantially comprised of one segment, the Group’s activities related to OML-113.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
43
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
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.
2023
2022
£’000
£’000
Revenue from share in offshore oil and gas licence in Nigeria
-
662
-
662
4
OPERATING LOSS
2023
2022
£’000
£’000
Loss from continuing operations is arrived at after charging:
Directors’ remuneration (see note 6)
243
492
Employee salaries and other benefits
-
23
Amortisation
57
65
Decommissioning costs – Unwinding of provision
111
138
Decommissioning costs – Change in provision estimate
-
-
Impairment of intangible assets
16,843
-
Auditors’ remuneration:
fees payable to the principal auditor for the audit of the Group’s financial statements
47
35
5
FINANCE COSTS
2023
2022
£’000
£’000
Short term loan finance costs
166
116
Bank interest and charges
7
-
Interest on convertible loan note
18
-
191
116
6
EMPLOYEE REMUNERATION
The expense recognised for employee benefits for continuing operations is analysed below:
2023
2022
£’000
£’000
Wages and salaries (including directors and employee benefits)
253
487
Pensions
19
-
Amounts written off as due to directors
(100)
-
Social security costs
71
28
243
515
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
44
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
Directors’ remuneration:
Wages and salaries (including benefits)
253
466
Pensions
19
-
Social security costs
71
26
343
492
Further details of Directors’ remuneration are included in the Report on Directors’ Remuneration on page 18.
Only the directors are deemed to be key management, there are no employees and no employee remuneration. The average
number of employees (including directors) in the Group was 6 (2022:6).
7
INCOME TAX EXPENSE
2023
2022
£’000
£’000
Current tax – ordinary activities
-
-
2023
2022
£’000
£’000
Loss before tax from ordinary activities
(17,799)
(2,122)
Loss before tax multiplied by rate of corporation tax in the UK of 23.5%
(2022: 19%)
(4,183)
(403)
Effect of tax rates in foreign jurisdictions
2,184
-
Expenses not deductible for tax purposes
2,537
23
Unrelieved tax losses carried forward
(538)
380
Total tax charge for the year
-
-
The corporation tax assessed for the year is different from that at the standard rate of corporation tax in the United
Kingdom of 23.5% (2022: 19%).
No deferred tax asset has been recognised in respect of the Group’s losses as the timing of their recoverability is uncertain.
8
EARNINGS AND NET ASSET VALUE PER SHARE
Earnings
The basic and diluted earnings per share is calculated by dividing the loss attributable to owners of the Group by the
weighted average number of ordinary shares in issue during the year.
2023
2022
£’000
£’000
Loss attributable to owners of the Group
- Continuing operations
(17,799)
(2,122)
Continuing and discontinued operations
(17,799)
(2,122)
2023
2022
Weighted average number of shares for calculating basic and fully
diluted earnings per share
352,852,268
252,369,021
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
45
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
2023
2022
Pence
pence
Earnings per share:
Loss per share from continuing and total operations
(5.0)
(0.8)
As the result for the year was a loss, the basic and diluted loss per share are the same. The weighted average number of
shares used for calculating the diluted loss per share for 2023 and 2022 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.
9
OTHER OPERATING LOSSES
GROUP
COMPANY
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Loss on disposal of leases in Blade Oil V,LLC
(501)
-
-
-
Gain on reduction of OML 113 JV creditor
1,456
Gain on settlement of OFX Holdings, LLC loan
65
-
-
-
Total
1,020
-
-
-
10
INTANGIBLE ASSETS
GROUP
The brought forward 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.
During the year, 32.08% share of OML 113 was purchased by a third party for a consideration of $6,000,000. This was
compared to the carrying value of the Company’s share of OML 113 of £17,899,000 and was impaired down to the
corresponding value of the Company’s share of OML133, £4,803,000. A further impairment assessment was carried out
and Aje was impaired by £4,606,013.
Acquisition of Blade V
During the year, the Company purchased 100% of the membership interest of Blade Oil V, LLC. The lease and goodwill from
the acquisition has been recognised as an exploration asset in intangibles. Further details around this balance can be found
in note 25.
Development costs
2023
2022
£’000
£’000
Cost
At 1 January 2023
23,719
21,323
Additions
-
-
Exploration assets addition
160
-
Foreign currency exchange translation difference
(1,122)
2,396
At 31 December 2023
22,757
23,719
Amortisation
At 1 January 2023
5,820
5,174
Charge for year
57
65
Impairment
16,843
-
Foreign currency exchange translation difference
(320)
581
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
46
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
At 31 December 2023
22,400
5,820
Net book value at 31 December 2023
357
17,899
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.
11
INVESTMENT IN SUBSIDIARIES
ADM Energy PLC (the Company) together with its below mentioned subsidiaries are the Group.
On 10 August 2016, the Group completed the agreement for the acquisition of Jacka Resources Nigeria Holdings
Limited, now renamed ADM 113 Limited (“ADM 113”), a BVI registered company, in which Jacka Resources Limited
(“JRL”) held the single issued share. ADM 113’s sole asset is its wholly owned subsidiary, P R Oil & Gas Nigeria Limited
(“PROG”), a Nigerian registered company which holds a 9.2% revenue interest in the OML 113 licence, offshore
Nigeria, which includes the Aje Field ("Aje"), where oil production commenced in May 2016. During the year, the
investment was impaired to nil.
In April 2021 the Group acquired 51% of the equity in K.O.N.H. (UK) Limited for a nominal fee.
On 1 May 2023, the Group acquired 100% of the equity of Blade Oil V, LLC for £668,416. Further details can be found
in note 25.
2023
2022
£’000
£’000
Balance at beginning of period
12,343
12,335
Advances to PROG
-
8
Acquisition of Blade V
668
-
Impairment of PROG
(12,343)
-
Balance at end of period
668
12,343
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
100% of ordinary shares
Maples Corporate Services (BVI) Ltd
Kingston Chambers
P.O. Box 173, Road Town, Tortola
*P R Oil & Gas
Nigeria Limited
Oil exploration
& production
Nigeria
100% of ordinary shares
1, Murtala Muhammed Drive
Ikoyi, Lagos
K.O.N.H. (UK)
Limited
Dormant
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
51% of ordinary shares
Geo Estratos MXOil,
SAPI de CV
Dormant
Mexico
100% of ordinary shares
Lago Alberto 319, Piso 6 IZA Punto
Col. Granada, Del. Miguel Hidalgo
CP 11520, Ciudad de Mexico
ADM Asset Holdings
Limited
Dormant
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
100% of ordinary shares
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
47
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
ADM
113
One
Limited
Dormant
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
100% of ordinary shares
ADM Energy Services
Limited
Dormant
60 Gracechurch Street, London,
United Kingdom, EC3V 0HR
100% of ordinary shares
ADM Energy USA Inc
Dormant
4001 Shady Valley Court, Arlington,
Texas 76013
100% of ordinary shares
Blade Oil V, LLC
Oil exploration
& production
4001 Shady Valley Court, Arlington,
Texas 76013
100% of ordinary shares
12
INVESTMENT IN ASSOCIATES
On 1 November 2023, the Group acquired 53% of the equity of OFX Technologies, LLC for £1,062,148. Of this amount,
£860,355 was recognised as share consideration for 86,035,489 ordinary shares of 1p each. The shareholding subsequently
dropped to 46.8%. By virtue of its shareholding, ADM owned 46% of the voting rights of OXFT and 51.2% of the non-voting
right. Therefore, the investment in OFX Technologies, LLC has been recognised as an associate using the equity method of
accounting.
2023
2022
£’000
£’000
Balance at beginning of period
-
-
Investment in OFX Technologies, LLC
1,062
-
Balance at end of period
1,062
-
The Group’s associate companies are as follows:
OFX Technologies, LLC
Holding company
4001 Shady Valley Court,
Arlington, Texas 76013
46.8% of ordinary shares
* Efficient Oilfield Solutions, LLC
Oil exploration &
production
4001 Shady Valley Court,
Arlington, Texas 76013
100% of ordinary shares
*Indirectly held
13
INVESTMENTS HELD FOR TRADING
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the
hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the
relevant asset.
The investments held by the Group are designated as at fair value through profit or loss.
GROUP AND COMPANY
2023
2022
£’000
£’000
Fair value of investments brought forward
28
28
Impairment of investments
(28)
-
Fair value of investments held for trading
-
28
Investments held at the year end were categorised as follows
Level 3
-
28
-
28
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
48
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the
hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the
relevant asset as follows:
Level 1 valued using quoted prices in active markets for identical assets.
Level 2 valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.
Level 3 valued by reference to valuation techniques using inputs that are not based on observable market data.
The valuation techniques used by the company are explained in the accounting policy note, “Financial assets held at fair value
through profit and loss”. There are no Level 1 and Level 2 investments.
14
INVENTORY
GROUP
COMPANY
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Inventory
-
36
-
-
Total inventory
-
36
-
-
Inventory represents the Group’s share of the stock of oil lifted but unsold, stated at the lower of cost and market value.
£36,000 was recognised as an expense during the year (2022 £Nil) as the inventory was unsaleable and written off during
the year.
15
TRADE AND OTHER RECEIVABLES
GROUP
COMPANY
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Other receivables
13
18
13
13
Prepayments and accrued income
5
4
5
4
18
22
18
17
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 2023 and 2022 there were no trade receivables.
16
CASH AND CASH EQUIVALENTS
GROUP
COMPANY
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Cash at bank
-
25
-
25
Cash and cash equivalents
-
25
25
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
49
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
17
TRADE AND OTHER PAYABLES
GROUP
COMPANY
2023
2022
2023
2022
CURRENT PAYABLES
£’000
£’000
£’000
£’000
Trade payables
668
883
660
883
Tax and social security
352
414
352
414
Other payables
29
38
30
38
Short term loan finance
155
170
155
170
Accruals and deferred income
574
735
543
702
Contingent consideration
495
-
495
-
2,273
2,240
2,235
2,207
NON-CURRENT PAYABLES
Amount owed in respect of OML 113 operating agreement
1,303
2,718
-
-
Long term loan finance
283
-
282
-
1,586
2,718
282
-
Total current and non current payables
3,859
4,958
2,517
2,207
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.
The long term loan finance from Hessia Group Limited, is accruing interest at £200 per day. The principle loan amount was
£120,000 and was originally due to be repaid by 29 August 2022. A default payment of £10,000 has been charged as the
repayment date was missed, and an additional £60,000 has been charged as a finance fee.
The fair value of trade and other payables is considered by the Directors not to be materially different to carrying amounts.
18
BORROWINGS
Convertible loans (“CLNs”)
On 25 May 2023, the Company issued secured convertible loan notes for up to $1,500,000. The loan notes carry an interest
rate of 15% per annum. Other key terms of the secured convertible loan notes are as follows:
•
Date of maturity of 3 years
•
Repayment in cash on the maturity date
•
Conversion can take place at any time at 1p per share
•
12 months after completion, the loan will convert up to 29.9% of the Company’s total shares
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:
GROUP AND COMPANY
2023
2022
£’000
£’000
Liability component at 1 January
-
212
Nominal value of convertible Loans
450
-
Equity component
(41)
-
Interest charged
18
9
Repayments
-
(221)
Liability component at 31 December
427
-
Current portion of loans
427
-
Non-current portion of loans
-
-
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
50
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
427
-
The interest charged for the year is calculated by applying an effective average interest rate of 15% to the liability component
for the period since the loan notes were issued.
Other borrowings (non-current)
2023
2022
£’000
£’000
Other loans
638
287
£285,000 (2022: £247,000) of other borrowings is non-interest bearing and its repayment date was 15 May 2023. As this
date has lapsed, interest is now accruing at 2% per month. 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. The balance of other
borrowings, £353,000 (2022: £40,000), is a loan that carries interest at 15% (2022: 6%) p.a and is repayable in full on 31
December 2025 (2022: 28 October 2024).
19
DECOMMISSIONING PROVISION
In accordance with the agreements and legislation, the wellheads, production assets, pipelines and other installations may
have to be dismantled and removed from oil and natural gas fields when the production has ceased. The exact timing of the
obligations is uncertain and depends on the rate the reserves of the field are depleted. However, based on the existing
production profile of the OML 113 licence area and the size of the reserves, it is expected that expenditure on retirement is
likely to be after more than ten years. The current basis for the provision is a discount rate of 10%.
The following table presents a reconciliation of the beginning and ending aggregate amounts of the obligations associated with
the decommissioning of oil and natural gas properties
2023
2022
£’000
£’000
Balance brought forward
1,557
1,264
Arising during the year
147
138
Foreign currency exchange translation difference
(83)
155
As at 31 December
1,621
1,557
20
CALLED UP SHARE CAPITAL
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 2022 (ordinary shares of
1p)
204,480,863
2,045 8,222,439,370
8,222
10,267
38,014
Shares issued
92,666,667
927
-
-
927
134
Issue of warrants
-
-
-
-
-
(2)
Share issue costs
-
-
-
-
-
(56)
At 31 December 2022
297,147,530
2,972 8,222,439,370
8,222
11,194
38,090
Shares issued (see notes below)
187,791,081
1,878
-
-
1,878
146
At 31 December 2023
484,938,611
4,850 8,222,439,370
8,222
13,072
38,236
The deferred shares have restricted rights such that they have no economic value.
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
51
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
Share issues in the year ended 31 December 2023
On 25 May 2023, 15,714,667 ordinary shares of 1p each were issued at 1.2p as consideration for the investment in Blade Oil
V, LLC, for a total of £188,576.
On 25 May 2023, 56,926,417 ordinary shares of 1p each were issued at 1.2p in exchange for the conversion of outstanding
contractual liabilities, for a total conversion of £683,117 debt to equity.
On 14 November 2023, 29,114,508 ordinary shares of 1p each were issued as settlement of certain outstanding trade and
other creditors, for a total of £291,145.
On 29 November 2023, 86,035,489 ordinary shares of 1p each were issued as consideration for the investment in OFX
Technologies, LLC, for a total of £860,355.
Share issues in the year ended 31 December 2022
On 21 January 2022, 51,000,000 ordinary shares of 1p each were issued at 1.11p each as a result of a placing, raising
£561,000 before expenses.
On 28 October 2022, 41,666,667 ordinary shares of 1p each were issued at 1.2p each as a result of a placing, raising £500,000
before expenses.
21
OTHER RESERVES
Reserve for
options/
warrants issued
Convertible loan
note reserve
Other reserves
£’000
£’000
£’000
Balance at 1 January 2022
941
19
960
Warrants issued in settlement of fees
2
-
2
Balance at 31 December 2022
943
19
962
Issue of options
18
-
18
Issue of warrants
15
-
15
Convertible loan note equity reserve
-
41
41
Balance at 31 December 2023
976
60
1,036
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
52
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
22
SHARE OPTIONS & WARRANTS
Options issued during the year ended 31 December 2023
On 25 May 2023, the Company issued 44,374,630 share options to Directors and employees. The options are exercisable at
1.2p per share for a period of 5 years from the date of issue.
Warrants issued during the year ended 31 December 2023
On 1 November 2023, the Company issued 39,959,017 investor warrants and 16,000,000 incentive warrants. The warrants are
exercisable at 1p per share for a period of 3 years from the date of issue.
On 9 November 2023, the Company issued 34,410,000 warrants in respect of the debt restructure. The warrants are
exercisable at 1.5p per share for a period of 3 years from the date of issue.
Warrants issued during the year ended 31 December 2022
In the following paragraphs the number of warrants issued prior to 31 December 2022 have been adjusted to reflect the 1 for
100 share consolidation.
On 26 January 2022, the Company issued 15,300,000 share warrants to subscribers in respect of a private placing. The warrants
are exercisable at 4.5p per share for a period of 2 years from the date of issue
The fair value of the share options and warrants at the date of issue was calculated by reference to the Black-Scholes model.
The significant inputs to the model in respect of the warrants issued in the year were as follows:
Issue date
25 May 2023 1 November 2023 9 November 2023 26 January 2022
Issue date share
price
0.68p
0.5p
0.5p
1.11p
Exercise price per
share
1.2p
1p
1.5p
4.5p
No. of options/
warrants
44,374,630
55,959,017
34,410,000
15,300,000
Risk free rate
2%
2%
2%
1%
Expected volatility
50%
50%
50%
50%
Expected life of
option/warrant
5 years
3 years
3 years
2 years
Calculated fair
value per share
0.1968p
0.076p
0.038p
0.0144p
The share warrants outstanding at 31 December 2023 and their weighted average exercise price are as follows:
2023
2022
Weighted average
exercise price
Weighted average
exercise price
Number
(pence)
Number
(pence)
Outstanding at 1 January
38,076,372
4.89
31,581,012
5.15
Issued
97,369,017
0.72
15,300,000
4.50
Lapsed or cancelled
(7,000,000)
-
(8,804,640)
-
Outstanding at 31 December
128,445,389
2.99
38,076,372
4.89
The fair value of the share warrants recognised as part of the premium paid in respect of the share subscriptions in the year
was £15,586. This amount was credited to the share warrant reserve and of this £10,175 (2022: nil) was recognised in the
profit and loss account as these warrants were issued in exchange for credit facility fees. In 2022, £2,000 was recognised in
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
53
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
the financial statements as the fair value of warrants issued.
23
RISK MANAGEMENT OBJECTIVES AND POLICIES
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are:
•
to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits
for shareholders;
•
to support the Group's growth; and
•
to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and
equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. Management regards total equity as capital and reserves, for capital management
purposes.
The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The
Group’s risk management is coordinated by the board of directors, and focuses on actively securing the Group’s short to
medium term cash flows by minimising the exposure to financial markets.
Management review the Group’s exposure to currency risk, interest rate risk, liquidity risk on a regular basis and consider
that through this review they manage the exposure of the Group on a near term needs basis
There is no material difference between the book value and fair value of the Group’s cash.
MARKET PRICE RISK
The Group’s exposure to market price risk mainly arises from potential movements in the fair value of its investments. The
Group manages this price risk within its long-term investment strategy to manage a diversified exposure to the market. If
each of the Group’s equity investments were to experience a rise or fall of 10% in their fair value, this would result in the
Group’s net asset value and statement of comprehensive income increasing or decreasing by £185,000 (2022: £60,000).
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 receivables,
and cash and cash equivalents. The credit risk for cash and cash equivalents is not considered material since the
counterparties are reputable banks. The maximum exposure to credit risk for loans and receivables is as set out in the
table below, and relates to the financing of the Group’s joint venture interests.
The Group's exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet
date, as summarised below:
2023
£’000
2022
£’000
Cash and cash equivalents
-
25
Loans and receivables
13
18
13
43
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 invested such that the maximum
available interest rate is achieved with minimal risk. Liquidity risk is managed by means of ensuring sufficient cash and
Docusign Envelope ID: 2EE1677F-BABA-42D2-91C3-227DAC544E5B
54
admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
cash equivalents are held to meet the Group’s payment obligations arising from administrative expenses. The cash and
cash equivalents are invested such that the maximum available interest rate is achieved with minimal risk. In the current
financial year and subsequent to the year end the Group has been carefully managing limited cash flows to ensure that
working capital commitments can be met. Crucial to this is additional funding secured to ensure the continued going
concern of the Group. Further details of this are included in the going concern accounting policy on page 35.
24
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:
2023
2022
£’000
£’000
FINANCIAL ASSETS:
Cash and cash equivalents
-
25
Investments held for trading (see fair value measurements below)
-
28
FINANCIAL ASSETS BY IFRS 7 FAIR VALUE HIERARCHY
Level 3 - Investments held for trading
-
28
-
28
FAIR VALUE MEASUREMENTS
The Group holds quoted investments that are measured at fair value at the end of each reporting period using the IFRS 7
fair value hierarchy as set out below.
Level 1 – valued using quoted prices in active markets for identical assets.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within
Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
The valuation techniques used by the Group are explained in the accounting policy note, “Investments held for trading”.
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:
2023
2022
£’000
£’000
Trade and other payables
3,542
4,193
Borrowings
793
457
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admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed
repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest repayment date on which the Group can be required to pay. The table includes both interest and principal cash flows.
To the extent that interest flows are floating rate, the undiscounted amount is derived from the interest rate curves at the
balance sheet date. The contractual maturity is based on the earliest date on which the Group may be required to pay.
Less than
1 month
1-3
months
3 months
to 1 year
1-5
years
Over 5
years
£’000
£’000
£’000
£’000
£’000
2023
Interest bearing:
Borrowings
-
-
155
638
-
Non-interest bearing:
Trade and other payables
-
1,664
-
1,303
-
2022
Interest bearing:
Borrowings
-
-
170
287
-
Non-interest bearing:
Trade and other payables
-
1,475
-
2,718
-
As at 31 December 2023 the Group had net debt (defined as cash less borrowings) of £795,000 (2022: net debt of £432,000).
The movement arose from cash flows.
25
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.
Liabilities subject to dispute
The Group and company's statement of financial position includes some liabilities subject to dispute with the counterparty.
The Directors have taken the decision to accrue the maximum plausible exposure in each case in order to ensure the financial
statements are not prepared on a materially misleading basis. Due to commercial and legal sensitivities no further specific
details with respect to these disputes can be included here.
Other contingent liabilities
Due to financial solvency circumstances relating to a former director a claim of up to £150,000 could potentially be made
against the company in the future. As the outcome of this situation is considered to be highly uncertain the directors have
made no provision in the financial statements at this time.
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admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
26
ACQUISITION
Blade Oil V, LLC
On 25 May 2023, the Company purchased 100% of the membership interest of Blade Oil V, LLC from OFX Holdings, LLC. Blade
Oil V,LLC has five on-shore US oil leases.
The total consideration payable was £999,208. This comprised of US$235,720 (£188,576) financed via the issuance of
15,714,667 new ordinary shares at a price of 1.2p per share, US$235,720 (£190,557) loan note issued by ADM Energy USA,
the issue of warrants over 7 million ordinary shares in the Company and contingent deferred consideration of £618,432.
The contingent deferred consideration will be payable on the first 180,000 barrels of oil produced. The production payment
will be US$5.00 per barrel if the realised price is greater than US$70.00 per barrel and US$3.50 if the realised price is greater
than US$50.00 per barrel and less than US$70.00 per barrel. There will be no payment in periods when the realised oil price
is less than US$50.00 per barrel. It was determined that there was a 50% probability of achieving either benchmark. This
resulted in the contingent deferred consideration being valued at £618,432.
On 9 November, 2023, the Company returned all of the leases with the exception of the Altoona lease to OFX Holdings, LLC.
The total consideration was reduced by the cancellation of US$250,000 of debt obligations owed to OFX Holdings, LLC., the
reduction of the contingent deferred consideration of US$150,000 and the 7 million warrants were terminated. After
returning the leases, the investment in Blade Oil V, LLC reduced by £836,047.
The following table summarises the consideration paid for Blade Oil V,LLC and the fair values of the assets and equity assumed
at the acquisition date and then after the remaining leases were returned:
£
Total proceeds from share issue
188,576
Total proceeds from loan facility
190,557
Total proceeds from warrants issue
1,643
Total proceeds from contingent liability
618,432
Less proceeds from warrants terminated
(1,643)
Less reduction on loan facility
(156,326)
Less reduction in total consideration due
(49,366)
Less reduction in contingent liability
(123,416)
Total consideration payable
668,457
Recognised assets and liabilities acquired:
Intangible assets – Exploration asset
41,900
Altoona lease
121,261
Other leases
505,296
Total identifiable net assets
668,457
Goodwill
-
In accordance with IFRS 3, the Group conducted a Purchase Price Allocation (PPA) analysis to split out separately identifiable
assets from acquired goodwill. Upon completing this analysis, the Group acknowledged a £161,926 decrease to goodwill and
a corresponding uplift in exploration assets.
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admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
27
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.
OFX Holdings, LLC
OFX Holdings, LLC is a substantial shareholder of the Company. Stefan Olivier and Claudio Coltellini are nominee directors
for OFX Holdings, LLC.
On 25 May 2023, the Company purchased Blade Oil V, LLC from OFX Holdings, LLC. The details of this transaction are in note
25. On the same date, the Company entered into a ‘USA loan facility’ agreement with OFX Holdings, LLC, for $235,720
(£190,557) at 9% interest per annum. A secured convertible loan note was issued to OFX Holdings, LLC for a total of $250,000
(£209,410). On 9 November 2023, OFX Holdings, LLC discounted and converted $275,000 (£226,000) of the outstanding
loan with the company to 15,820,000 ordinary shares for a total of £158,200 and 7,910,000 3 year warrants, resulting in a
gain to the company of £65,024 (note 9). A further 26,500,000 warrants of 1.5p each with an expiry date of 3 years were
issued to OFX Holdings, LLC. On 14 November 2023, the remaining loan amounts of £352,990 outstanding with OFX
Holdings, LLC was consolidated onto one loan agreement with a 15% interest rate per annum and a maturity date of 31
December 2025.
On 29 November 2023, the company acquired 53.1% of the economic interest in OFX Technologies, LLC from OFX Holdings,
LLC for a total consideration of £801,553, made up 79,918,033 shares are 1p each, 39,959,017 restricted warrants at 1p
each with a 3 year term, and a further 16 million incentive warrants at the same price and terms.
Directors
On 25 May 2023, the Company issued a secured convertible loan note to Oliver Andrews, who was a director of the Company
during the year, for a total of $100,000 (£78,905). On the same date, £100,000 of ordinary shares were issued to Oliver
Andrews in exchange for his services to the Company during the year.
On 25 May 2023, ordinary shares of 1p each were issued to Stefan Olivier and Richard Carter as an incentive, for £50,000 to
each of them.
28
ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate controlling party.
29
POST PERIOD END EVENTS
Post period events are detailed in the Directors’ Report
On 1 January 2024, the Company acquired 100% of SW Oklahoma Reclamation, LLC from Bargo Capital, LLC and OFX
Holdings, LLC. As a result of the investment, the Company will have a 30.6% interest in JKT Reclamation LLC. The total
consideration was US$827,500 comprising; 43,200,000 ordinary shares of 1p each for US$540,000, a cash investment of
US$287,500 and the grant of 14,640,000 3-year, 1.0p warrants.
In April 2024, Concepta Consulting AG entered into an investment agreement with the Company. It will invest US$380,000
by way of a loan conversion and subscription for 30,400,000 new ordinary shares of the Company at 1p per share. The
investment comprises loan conversions of US$180,000 and a further cash subscription for US$200,000. A further
6,050,000 new ordinary shares at 1p per share were also issued. In aggregate £220,500 was raised. Concepta Consulting
AG now holds 5.4% of the enlarged share capital of the Company.
The remaining contingent payment of up to US$615,000 associated with the Blade Oil V, LLC assets debt reduction was
terminated by OFX Holdings, LLC.
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admenergy plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
On 1 June 2024, the Company acquired 100% of the equity interest of Vega Oil and Gas, LLC for a consideration of
US$150,000 capital commitment by ADM USA, a US$100,000 borrowing facility and the issuance of 20 million, 5-year
warrants in the Company with an exercise price of 1.0 pence.
ADM USA has entered into a financing agreement with OFX Holdings, LLC, who will provide up to US$600,000 financing,
with an interest rate of 12.0% per annum.
£532,752 total debt with OFX Holdings, LLC; Ventura Energy Advisors, LLC; and, Catalyse Capital, Ltd was converted into
53,275,200 ordinary shares in the Company at a price of 1.0p per share. A further £100,000 due to Catalyse Capital, Ltd
has been settled by the issue of an additional 10,000,000 shares at a price of 1.0p per share.
On 1 July 2024, the Company was temporarily suspended from trading on AIM. The suspension will be lifted once these
audited accounts are published.
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