ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 30 APRIL 2021
CONTENTS
Chairman’s Report
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Statement of compliance with the QCA Corporate Governance Code
Corporate Information
Page
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15
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17
35
42
CHAIRMAN’S REPORT
I’m pleased to provide the following statement to support the final results for the year ended 30 April 2021. This
was the first full year of Advance Energy, having established the rebranded company in February 2020 and set
out our strategic objectives in March 2020. Those objectives focused on growing the Company through strategic
partnerships on compelling projects where we could identify and unlock material upside with a view to
establishing near-term cash flow and significant value accretion. I’m pleased to report that the Company made
big strides towards our long-term objectives in this first year.
The reverse takeover transaction that saw Advance Energy farm into the Buffalo Field in East Timor alongside
Carnarvon Petroleum is the perfect embodiment of our strategy given the proven resources and the highly
material cash flow that we believe can be unlocked from that asset. It also saw us establishing a 50/50 joint
venture alongside an Operator with a strong track record in the region and a shared vision for the potential that
remains in the Buffalo Field.
We were delighted to complete that transaction in April of this year, having completed an equity placing of
£21.8m with new and existing shareholders. The fact that we were able to raise that equity, at a time when the
market conditions were particularly challenging, reflects the differentiated nature of our investment proposition
and the quality of the opportunity that we presented to our shareholders and the market.
The focus since completion has been to work alongside Carnarvon Petroleum in order to prepare for the much
anticipated Buffalo-10 well, which is designed to test the significant attic oil accumulation remaining after the
original development, and to enable us to convert the 2C resources of 34.3 MMstb into 2P reserves following
re-certification. In that regard we were delighted to recently announce the signing of a rig contract with Valaris
that will see the joint venture spudding the Buffalo-10 well in late October or early November 2021. In the event
that this well is successful and validates the current technical evaluation, it will be truly transformational for the
Company and deliver significant cash flow over a short time frame.
At the time of announcing the farm-in, the oil price was US$50/bbl Brent and the independently verified
economics of the project were very compelling indeed. Pleasingly, the oil price has strengthened and stabilised
through the calendar year, and at the current pricing of circa US$70/bbl the project economics are even more
compelling, resulting in the potential for exceptional cash flow generation and rates of return in a success case.
The joint venture has also undertaken a lot of technical assessment with regards to the various development
concepts that would be required to bring the Buffalo field on stream, including the possibility of a phased
approach to deliver even earlier production and associated cash flow.
The Advance Energy team are, of course, pragmatic about the risks associated with the well. With multiple
decades of combined industry experience between us, we are cognisant of the operational and geological
hurdles in front of us. That said, the Buffalo project was selected on the strength of its risk versus reward ratio -
with low geological risk relative to the upside achievable in the success case.
As well as progressing the Buffalo project to a drill ready status, the team has also been actively seeking to
diversify the portfolio in line with the strategic vision. To support this, we have relinquished the legacy assets
that we inherited in the UK, whilst also focusing on business development of opportunities that meet our
investment criteria. We are actively screening numerous opportunities and hope to bring some of these into
fruition in the current fiscal year. The market drivers for our business development strategy remain the same,
as IOCs and larger independents continue to divest of assets to conform with their energy transition strategies.
Smaller industry players are also more focused on innovative and technical solutions to unlock hidden value
from existing resources, and the Advance Energy team brings specific capabilities in this regard. As such, we
continue to position the Company as a highly competent industry counterparty that can support the objectives
of our partners and look forward to providing more information on our business development activities as our
ongoing discussions progress.
1
From a corporate standpoint our focus has been on cost discipline and developing an appropriate ESG agenda.
The first point is a core strategic objective for the Company, recognising the importance of cash preservation
and financial efficiency. The second point is now a strategic priority for all companies, irrespective of sector, but
is particularly important for energy companies given the increasing focus on climate change. Advance Energy
seeks to balance its appreciation of climate change and commitment to environmental stewardship with the
(still) growing demand for hydrocarbons and the positive socio-economic impact they play in developing
economies such as Timor-Leste. It is for this reason that we prioritise ESG in our business development process,
to ensure we are partnering with quality operators who have a firm commitment to operational excellence. We
strive to consider all ESG factors when screening new opportunities to ensure they meet with our required
standards and those of our wider stakeholders.
In summary, it has been a very eventful year for Advance Energy, and we are pleased to have delivered on all
the objectives we set ourselves when we embarked on this journey in February 2020. The fact that we have
managed to do so against the backdrop of a global pandemic and wildly volatile commodity environment is
particularly satisfying and speaks volumes of the team we have assembled. We have built a good platform from
which to grow and look forward to the future with much excitement and anticipation. Finally, I’d like to thank
all our shareholders for their support and faith in the management team and our strategy. We look forward to
providing regular updates throughout the Buffalo-10 well and hope to be issuing good news around the end of
the calendar year.
Mark Rollins
Non-Executive Chairman
21 September 2021
2
DIRECTORS’ REPORT
The Directors present their report and the audited financial statements for the year ended 30 April 2021.
Principal activities, business review and future developments
The principal activity of Advance Energy plc during the year was oil appraisal and development in the Democratic
Republic of Timor-Leste. Further details on the activities of the Group are provided in the Review of Operations.
Impact of COVID-19
The global COVID-19 pandemic required us, like many of our peers, to alter our operational plans and implement
strict safety protocols to protect our staff and our local community. Our operational activity was not affected.
Ultimately the Company was able continue with the day to day activities with minimal affect. Whilst there are
still certain restrictions imposed on our activities by the crisis, we are confident of our ability to adapt to this
dynamic situation and continue our day to day activities.
Results and dividends
Loss on ordinary activities after taxation amounted to US$2,854,000 (30 April 2020: US$1,231,000). The
Directors do not recommend the payment of a dividend (30 April 2020: US$Nil).
Review of Operations and Business Activity
On 1 June 2020 the Company appointed Mr Stephen West as Chief Financial Officer and Executive Director of
the Company Board and Mr Graham Smith resigned as Non-Executive Director. In addition, Mr Ross Warner
stepped down from his Executive Director position and assumed the role of Non-Executive Director on the same
date.
On 14 September 2020 the Company announced that the Company's wholly owned subsidiary Resolute Oil &
Gas (UK) Limited’s 8% non-operated working interest in the P1918 Licence would expire, together with the other
joint venture participant’s interests, on 31 January 2021. This followed the completion of an earlier appraisal
drilling programme by the Operator of the licence, Corallian Energy Limited, and a subsequent evaluation of the
P1918 Licence which resulted in a recommendation to the joint venture that the licence not be renewed when
the second term expires on 31 January 2021 based on the conclusion that the Colter South discovery could not
be commercially developed.
On 7 October 2020 the Company announced that it had entered into a Deed of Termination and Release with
PT Petroenim Betun-Selo and PT Celebes Artha Ventura in relation to the Operating Services & Option
Agreement for production on the Betun-Selo KSO field in Sumatra, Indonesia.
On 12 November 2020 the Company announced that it had raised £300,000 through the issue of 136,363,636
new ordinary shares at a price of 0.22 pence per share. On the same date the Company agreed to issue
21,416,515 Ordinary Shares at 0.22 pence per share to various creditors to settle outstanding amounts.
On 17 December 2020 the Company announced that it had entered into a subscription agreement with Timor-
Leste Petroleum Pty Ltd, a subsidiary of Carnarvon Petroleum Limited, pursuant to which the Company’s wholly
owned subsidiary, Advance Energy TL Limited (“AETL”), would, subject to certain conditions, subscribe for equity
such that it will hold up to 50% of the total equity interest in Carnarvon Petroleum Timor Unipessoal Lda for
consideration of up to US$20,000,000.
On 16 April 2021 the Company undertook a capital consolidation whereby every ten existing ordinary shares
were consolidated into one new ordinary share.
On 19 April 2021 the Company announced that it had raised £21,842,600 through the issue of 840,100,000
ordinary shares at a price of 2.6 pence per share. The net proceeds of the placing were utilised to fund the
subscription by AETL for equity in Carnarvon Petroleum Timor Unipessoal Lda. In addition, on the same date
3
Mr Stephen Whyte and Mr Larry Bottomley were appointed to the Board as independent Non-Executive
Directors.
Key Performance Indicators (“KPIs”)
The Board monitors the activities and performance of the Group on a regular basis, including as part of the
regular Board updates and Board meetings. During the year the principal focus of the Group was to divest legacy
assets in the Republic of Indonesia and to acquire upstream E&P assets in line with the new company strategy.
The KPIs being monitored by the Group as at the date of this report were as follows:
-
-
-
Cash management;
Business development; and
Project development.
Risks and uncertainties
The principal risks and uncertainties inherent in an Advance Energy’s business strategy are summarised below:
- Volatility of commodity prices which may impact investment decisions taken. The Group monitors price
-
forecasts in Board meetings and reacts accordingly.
Foreign currency volatility impacts the potential cost base of projects and the Group monitors and
assesses, as far as practicable, the impact on budgets and cash flows.
- Operational risks relate to dealing with stakeholders on any potential project. The ability of partners to
finance and support projects, customers or governments to approve projects can impact budgets and
cash flows and the Group maintains and monitors its stakeholder relationships.
- Availability of finance and funding is key to ensuring that there are funds available for working capital
and to allow the Group to make strategic investment decisions. The Board is responsible for monitoring
the cash flows and cash forecasts of the business.
Financial Risk Management
The Group’s operations expose it to a variety of financial risks that include the effect of changes in debt market
prices, movements in foreign currency exchange rates, credit risk and liquidity risk. The Group has a risk
management programme in place that seeks to limit the adverse effects on the financial performance of the
Group by monitoring levels of debt finance and the related finance costs. The Group does not use derivative
financial instruments to manage interest rate or foreign exchange costs and, as such, no hedge accounting is
applied. Details of the Group’s financial risk management policies are set out in Note 16 to the Financial
Statements.
Internal Controls
The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s
control environment and any related shortfalls during the year. Since the Group was established, the Directors
are satisfied that, given the current size and activities of the Group, adequate internal controls have been
implemented.
Going Concern
The financial statements have been prepared on a going concern basis. The Group has not yet earned revenues
from its upstream E&P assets. The operations of the Group are currently financed from funds raised from
shareholders. In common with many pre-production entities, the Group may need to raise further funds in order
to progress the project into the production of revenues.
The Group has cash and cash equivalents of US$8,103,000 at 30 April 2021 and the Directors are of the view this
is sufficient to fund the Group’s committed expenditure over the next 12 months from the date of approval of
these financial statements, without raising funds in this period.
The Directors have 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.
4
Directors
The following Directors held office during the year and to the date of this report:
Mark Rollins (appointed 4 February 2020)
Leslie Peterkin (appointed 4 February 2020)
Ross Warner
Graham Smith (resigned 1 June 2020)
Stephen West (appointed 1 June 2020)
Stephen Whyte (appointed 19 April 2021)
Larry Bottomley (appointed 19 April 2021)
The Board considers the directors to be independent other than in respect of those directors with an interest as
disclosed below.
Directors’ interests
The beneficial and non-beneficial interests in the Company’s shares of the Directors (who remain in office at the
respective reporting dates) and their families, as at the date of approval of the financial statements are as
follows:
Mark Rollins
Leslie Peterkin
Ross Warner
Stephen West
Stephen Whyte
Larry Bottomley
Graham Smith
2021
2020
Ordinary shares
Ordinary shares
29,403,153
26,611,153
205,287
4,943,590
391,266
-
36,000
139,833,333
138,833,333
2,052,875
-
-
-
360,000
2021
Options (1)
24,840,000
29,450,000
5,180,000
22,340,000
1,670,000
1,670,000
-
2020
Options
50,000,000
50,000,000
12,500,000
-
-
-
-
(1)
These relate to share options which were allocated to the Directors of the Company on 4 February 2020, 8
July 2020 and 19 April 2021. Various conditions attach to each option as to vesting periods and each option is
subject to the option holder meeting service commitments during the vesting period. There are no other
performance conditions attached to the options.
Details of the Directors’ remuneration are given in note 9 to the Financial Statements.
5
Provision of information to auditors
So far as each of the Directors is aware at the time this report is approved:
there is no relevant audit information of which the Group's auditors are unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant
audit information and to establish that the auditors are aware of that information.
Auditor
Lubbock Fine LLP, who, being eligible, have expressed their willingness to continue in office in accordance with
the Isle of Man Companies Act 2006.
This report was approved by the Board and signed on its behalf by:
Mark Rollins
21 September 2021
6
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
The Directors are required to prepare financial statements for each financial year. The Directors have elected to
prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors must not approve the financial statements
unless they are satisfied they give a true and fair view of the state of affairs of the Group and of the profit or loss
of the Group for that year. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable IFRSs as adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the Financial Statements;
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 proper accounting records that are sufficient to show and currently
explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the
Group and which allow financial statements to be prepared. 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.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Group’s website. The Group is compliant with AIM Rule 26 regarding the Group’s website.
7
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF ADVANCE ENERGY
PLC
OPINION
We have audited the consolidated financial statements of Advance Energy Plc (the “Company”) and its
subsidiaries (the “Group”) for the year ended 30 April 2021, which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of
Changes in Equity, the Consolidated Cash Flow Statement, and the related notes, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
the financial statements give a true and fair view of the state of the Group’s affairs as at 30 April 2021
and of the Group’s loss for the year then ended; and
the financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the
International Code of Ethics for Professional Accountants (including International Independence Standards)
issued by the International Ethics Standards Board for Accountants (“IESBA Code”). We have fulfilled our other
ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Ongoing COVID-19 pandemic and going concern
How our audit addressed the key audit matter
Due to the ongoing COVID-19 pandemic there is
still uncertainty and risk in the global economy as
case numbers are continuing to fluctuate across
the globe. If the pandemic does worsen there
may be significant operation delays caused, due
to potential restrictions on travel. Furthermore, it
could potentially result in a weaker local and
global economy which may result in difficulties in
raising additional external finance.
As detailed in accounting policy 2(I), the directors
are confident that the Group will be able to obtain
sufficient funds to meet its liabilities as they fall
due.
We have discussed the going concern basis with
management and reviewed the Group’s forecasts
and budgets and exit plans. We have stress tested
the forecasts with a series of “What-if” scenarios.
8
Accuracy and completion of equity
In the current year, the Group entered into a large
number of transactions impacting equity which
include share issues, share warrants and other
equity settled transactions with third parties.
Given the qualitative and quantitative impact on
the share structure of the Group and the
judgements and estimates required to be taken by
management to value share transactions, this
financial statement area is considered to be an
in a material
audit risk that could result
misstatement.
Value and classifications of investment
In the current year, the Group acquired a 50%
share in Carnarvon Petroleum Timor. Due to the
different accounting treatments on investments
depending upon whether they are an associate or
subsidiary there is a potential
risk that the
consolidated financial
statements have been
prepared on an incorrect basis.
We obtained an understanding of the nature of
equity transactions entered into by the Company
during the year
with
management, a review of regulatory news service
announcements and from the review of Board
minutes and key agreements.
through discussions
Valuations prepared for share based payments
issued have been reviewed. In doing so, we have
assessed the modelling approach taken and
verified the key assumptions and inputs into these
models.
We reviewed management’s accounting policy for
the treatment of this investment and assessed
whether it is in line with IAS 28.
We have reviewed underlying agreements and
have concluded that the investment of 50%
indicates that the Company holds significant
influence over in Carnarvon Petroleum Timor and
therefore meets the criteria of IAS 28.
We have recalculated the Investment in in
as
Carnarvon Petroleum Timor
recalculated the share of profit/loss from date of
acquisition to the year end date. We are satisfied
that the transactions are in accordance with the
accounting standards.
well
as
Additionally there is a risk that the value of the
investment is potentially overstated in the
financial statements if there are indications of
impairment.
Classification of expenses
In Carnarvon Petroleum Timor
there are
significant costs being incurred due to the
development of the Buffalo well. There is a risk of
misstatement if these have been incorrectly
capitalised.
We reviewed management’s accounting policy for
impairment and assessed whether it is in line with
IAS 28, IAS 36 and IFRS 6.
the
investment
Furthermore when considering the carrying value
considered
we
of
management’s assessment
indications of
impairment and carried out our own assessment
of this.
have
of
We reviewed management’s accounting policy for
capitalisation of exploration expenditure and
assessed whether it is in line with IFRS 6.
We have reviewed a sample of the accounting
transactions of Carnarvon Petroleum Timor and
satisfied ourselves that these transactions are
being correctly treated in accordance with group
accounting policies.
9
OUR APPLICATION OF MATERIALITY
The scope and focus of our audit was influenced by our assessment and application of materiality. We apply the
concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements
on our audit and on the consolidated financial statements.
We define financial statements materiality as the magnitude by which misstatements, including omissions, could
influence the economic decisions taken on the basis of the consolidated financial statements by reasonable
users.
We also determine a level of performance materiality, which we use to determine the extent of testing needed
to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the consolidated financial statements as a whole.
Overall materiality - We determine materiality for the consolidated financial statements as a whole to
be $571k. This was based on the key performance indicator, being 2% of gross assets. We believe
gross assets to be the most appropriate bench mark as the company looks to build value through
exploration investments which will be held within the balance sheet.
Performance materiality - On the basis of our risk assessment, together with our assessment of the
Group’s control environment, our judgement is that performance materiality for the consolidated
financial statements should be 50% of materiality, amounting to $285k.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated 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 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 an understanding of the structure of the Group, its
activities, the accounting processes and controls, and the industry in which they operate. Our planned audit
testing was directed accordingly and was focused on areas where we assessed there to be the highest risk of
material misstatement. During the audit, we reassessed and revaluated audit risks and tailored our approach
accordingly.
The audit testing included substantive testing on significant transactions, balances and disclosures, the extent
of which was based on various factors such as our overall assessment of the control environment, the
effectiveness of controls and management of specific risk.
We communicated with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant findings, including any significant deficiencies in internal control that we
identify during the audit.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information
included in the Annual Report, other than the consolidated financial statements and our Auditors' Report
thereon. Our opinion on the consolidated financial statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
10
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the consolidated financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
RESPONSIBILITIES OF DIRECTORS
The directors are responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with International Financial Reporting Standards as adopted by the European Union, and for such
internal control as the directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’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 to cease operations, or
have no realistic alternative but to do so.
The directors are also responsible for overseeing the Group’s financial reporting process. The audit committee
of the Company (the “Audit Committee”) assists the directors in discharging their responsibility in this regard.
AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE GROUP 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 will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement 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 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 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 to cease to continue as a going concern.
11
• 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 the Directors 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.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
USE OF OUR REPORT
This report is made solely to the Company's members, as a body, in accordance with our engagement letter
dated 11 June 2021. 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 Auditors' 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.
Lubbock Fine LLP
Chartered Accountants & Statutory Auditors
3rd Floor Paternoster House
65 St Paul's Churchyard
London
EC4M 8AB
Date:
12
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Investment loss:
Unrealised loss on investments
Impairment of exploration asset
Other income
Asset evaluation expenses
Other administrative expenses
Net loss before finance costs and taxation
Finance costs
Share of net losses of associate accounted for
using the equity method
Loss before tax
Tax expense
Loss after tax attributable to owners of the
parent
Total comprehensive
attributable to owners of the parent
loss for the year
Basic and diluted loss per share attributable
to owners of the parent during the year
(expressed in US cents per share)
For the year
ended
30 April 2021
US$’000
For the year
ended
30 April 2020
US$’000
-
-
-
-
(47)
(2,539)
(2,586)
(256)
(12)
(2,854)
-
(2,854)
(604)
(267)
(871)
-
(23)
(293)
(1,187)
(44)
-
(1,231)
-
(1,231)
Note
12
13
6
6
10
(2,854)
(1,231)
7
(1.51)
(0.11)
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing.
The accompanying notes form an integral part of these Financial Statements.
13
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
Non-current assets
Investments accounted for using the equity
method
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Net assets
Note
11
15
As at
30 April 2021
US$’000
As at
30 April 2020
US$’000
20,262
20,262
203
8,103
8,306
28,568
(1,138)
(1,138)
27,430
-
-
15
562
577
577
(323)
(323)
254
Equity attributable to the owners of the parent
Share premium
Share reserve
Accumulated deficit
Total shareholder funds
47,656
1,039
(21,265)
27,430
18,665
-
(18,411)
254
The Financial Statements were approved and authorised for issue by the Board of Directors on 21 September
2021 and were signed on its behalf by
Director
The accompanying notes form an integral part of these Financial Statements.
14
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 May 2019
Loss for the year to 30 April 2020
Total comprehensive income
Transactions with equity shareholders of
the parent
Proceeds from shares issued
Cost of share issue
Share based payments
Balance at 30 April 2020
Loss for the year to 30 April 2021
Total comprehensive income
Transactions with equity shareholders of
the parent
Proceeds from shares issued
Cost of share issues
Share based payments
Share
premium
US$’000
16,878
-
-
1,833
(95)
49
18,665
-
-
31,589
(2,598)
-
Share
reserve
US$’000
Accumulated
deficit
US$’000
-
-
-
-
-
-
-
-
-
-
-
1,039
(17,131)
(1,231)
(1,231)
-
-
(49)
(18,411)
(2,854)
(2,854)
-
-
Total
equity
US$’000
(253)
(1,231)
(1,231)
1,833
(95)
-
254
(2,854)
(2,854)
31,589
(2,598)
1,039
Balance at 30 April 2021
47,656
1,039
(21,265)
27,430
The accompanying notes form an integral part of these Financial Statements.
15
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities:
Net loss for the year
Adjustments for:
Share of net loss of associate
Share based payments
Impairment of intangible asset
Change in working capital items:
(Increase)/Decrease in other receivables
Increase/(Decrease) in trade and other payables
Net cash used in operations
Cash flows from investing activities
Investment in associate
Other investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs
Net cash generated by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, at beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents, at end of the year
Major Non-Cash Transactions
Details of major non-cash transactions are described in note 12.
For the year
ended
30 April 2021
US$’000
For the year
ended
30 April 2020
US$’000
(2,854)
(1,231)
12
1,039
-
(188)
815
(1,176)
(20,274)
-
(20,274)
31,589
(2,598)
28,991
7,541
562
-
8,103
-
-
267
59
(529)
(1,434)
-
-
-
1,833
(95)
1,738
304
258
-
562
The accompanying notes form an integral part of these Financial Statements.
16
NOTES TO FINANCIAL STATEMENTS
1 Reporting Entity
Advance Energy plc (the “Company”) is domiciled in the Isle of Man. The Company’s registered office is at 55
Athol Street, Douglas, Isle of Man IM1 1LA. These consolidated financial statements comprise the Company and
its subsidiaries (together referred to as the “Group”). The Group is primarily involved in the E&P business,
focussed on the Democratic Republic of Timor-Leste. The Company is listed on AIM of the London Stock
Exchange.
2 Basis of accounting
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (“IFRS”). They were authorised for issue by the
Company’s board of directors on 21 September 2021.
Details of the Group’s accounting policies are included below:
Standards and amendments effective for periods beginning 1 January 2020 or later
A number of other new standards are effective from 1 January 2020 but they do not have a material effect on
the Company’s financial statements:
Amendments to IFRS 3: Definition of a business
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
Amendments to IAS 1 and IAS 8 Definition of Material
Conceptual Framework for Financial Reporting issued on 29 March 2018
Amendments to IFRS 16 COVID – 19 Related Rent Concessions
A number of new standards are effective for annual periods beginning after 1 January 2020 and earlier
application is permitted; however, the Group has not early adopted the new or amended standards in preparing
these consolidated financial statements.
The following amended standards and interpretations are not expected to have a significant impact on the
Group’s consolidated financial statements:
IFRS 17 Insurance Contracts (effective on or after 1 January 2023)
Amendments to IAS 1: Classification of Liabilities as Current or Non-current (effective on or after 1
January 2023) Reference to the Conceptual Framework – Amendments to IFRS 3 (effective on or after 1
January 2022)
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 (effective on or
after 1 January 2022)
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 (effective on or after 1
January 2022)
IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time
adopted (effective on or after 1 January 2022)
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
(effective on or after 1 January 2022)
IAS 41 Agriculture – Taxation in fair value measurements (effective on or after 1 January 2022)
A. Basis of consolidation
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
17
its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
ii. Non-controlling interests (“NCI”)
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of
acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions.
iii. Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates.
Associates are those entities in which the Group has significant influence, but not control or joint control, over
the financial and operating policies.
Interests in associates are accounted for using the equity method. They are initially recognised at cost, which
includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the
Group’s share of the profit or loss and other comprehensive income (“OCI”) of equity accounted investees, until
the date on which significant influence ceases.
iv. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
B. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group companies
at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated into the functional currency at the exchange rate when the fair value was
determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated
at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in
profit or loss and presented within finance costs.
However, foreign currency differences arising from the translation of the following items are
recognised in OCI:
– an investment in equity securities designated as at FVOCI (except on impairment, in which case foreign
currency differences that have been recognised in OCI are reclassified to profit or loss);
– a financial liability designated as a hedge of the net investment in a foreign operation to the extent that
the hedge is effective; and
– qualifying cash flow hedges to the extent that the hedges are effective.
18
ii. Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated into USD at the exchange rates at the reporting date. The income and expenses of
foreign operations are translated into USD at the exchange rates at the dates of the transactions.
Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except to the
extent that the translation difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint
control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary
but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the
Group disposes of only part of an associate or joint venture while retaining significant influence or joint control,
the relevant proportion of the cumulative amount is reclassified to profit or loss.
C. Employee benefits
i. Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
ii. Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment arrangements granted to employees and other
service providers is generally recognised as an expense, with a corresponding increase in equity, over the vesting
period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the
grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up
for differences between expected and actual outcomes.
D. Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in OCI.
The Group has determined that interest and penalties related to income taxes, including uncertain tax
treatments, do not meet the definition of income taxes, and therefore accounted for them under IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related
to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
19
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
–
–
–
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries, associates and joint arrangements to the
extent that the Group is able to control the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they can
be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences.
If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business
plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions
are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related
to income taxes, if any.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For
this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered
through sale, and the Group has not rebutted this presumption.
Deferred tax assets and liabilities are offset only if certain criteria are met.
E. Exploration expenditure
Costs incurred prior to acquiring the right to explore an area of interest are expensed as incurred. Exploration
and evaluation assets are intangible assets.
Exploration and evaluation assets represent the costs incurred on the exploration and evaluation of potential
hydrocarbon resources, and include costs such as seismic acquisition and processing, exploratory drilling,
activities in relation to the evaluation of technical feasibility and commercial viability of extracting hydrocarbons,
and general administrative costs directly relating to the support of exploration and evaluation activities.
The Company assesses exploration and evaluation assets for impairment when facts and circumstances suggest
that the carrying amount may exceed its recoverable amount. The recoverable amount is the higher of the assets
fair value less costs to sell and value in use. Assets are allocated to cash generating units not larger than operating
segments for impairment testing. Purchased exploration and evaluation assets are recognised as assets at their
cost of acquisition or at fair value if purchased as part of a business combination. They are subsequently stated
at cost less accumulated impairment. Exploration and evaluation assets are not amortised.
20
F. Share capital
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.
Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS 12.
G. Impairment
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than biological
assets, investment property, inventories, contract assets and deferred tax assets) to determine whether there is
any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any
goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro
rata basis.
H. Fair value measurement
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-
performance risk.
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
When one is available, the Group measures the fair value of an instrument using the quoted price in an active
market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use
of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into account in pricing a transaction.
If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets
and long positions at a bid price and liabilities and short positions at an ask price.
The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction
price – i.e. the fair value of the consideration given or received. If the Group determines that the fair value on
initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in
an active market for an identical asset or liability nor based on a valuation technique for which any unobservable
inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially
measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the
transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the
life of the instrument but no later than when the valuation is wholly supported by observable market data or the
transaction is closed out.
I. Going concern
The financial statements have been prepared on a going concern basis. The Group has not yet earned revenues
from its E&P assets. The operations of the Group are currently financed from funds raised from shareholders. In
common with many pre-production entities, the Group may need to raise further funds in order to progress
projects into the production of revenues.
The Group has cash and cash equivalents of US$ 8,103,000 at 30 April 2021 and the Directors are of the view
this is sufficient to fund the Group’s committed expenditure over the next 12 months from the date of approval
of these financial statements, without raising funds in this period.
21
The Directors have 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.
3 Functional and presentation currency
These consolidated financial statements are presented in US Dollars (“USD” or “US$”), which is the Company’s
functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
4 Use of judgements and estimates
In preparing these consolidated financial statements, management has made judgements and estimates that
affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised
prospectively.
A. Judgements
Information about judgements made in applying accounting policies that have the most significant effects on
the amounts recognised in the financial statements is included in the following notes:
– Note 11 – equity-accounted investees: whether the Group has significant influence over an investee;
– Note 17 – consolidation: whether the Group has de facto control over an investee.
B. Assumptions and estimation uncertainties
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements, are disclosed below:
Share based payments (note 8)
The Group has made awards of options and warrants over its unissued capital. The valuation of these
options and warrants involve making a number of estimates relating to price volatility, future dividend
yields, expected life and forfeiture rates.
Acquisition of associate (Note 11)
The Group acquired a 50% holding in an associate during the year and has fair valued the assets acquired
including the rights to the Buffalo Field.
Valuation of investments
The Group held two significant assets in the previous year: an intangible exploration asset in respect of
the Colter licence (discussed in note 13) and an Incremental Production Agreement asset in respect of
Betun Selo (note 12). The board reviewed the expected returns from both projects and determined that
both projects should be fully impaired at the previous year-end.
22
i) Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities. The Group has an established control framework with respect
to the measurement of fair values.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows.
–
–
–
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
Level 3 inputs
The following table gives information about how the fair values of Group’s investments are determined (in
particular, the valuation techniques and inputs used).
Assets and
liabilities
Nature of
investment
Fair value as
at 30 April
2021
Fair value as
at 30 April
2020
Valuation
techniques and
key inputs
Significant
unobservable
input
Financial assets at
fair value through
profit or loss
25% of equity
investment in
Eagle Gas Ltd
Financial assets at
fair value through
profit or loss
Financial assets at
fair value through
profit or loss
20% of equity
investment in
Peelwood Pty Ltd
Production
agreement
returns from
Betun Selo
5 Operating Segments
Disposed
USD Nil
Disposed
USD Nil
Recent purchase
price and market
knowledge
Expected
realisable value
from sale
Purchase price
and market
knowledge
Expected
realisable value
from sale
Disposed
USD Nil
Cashflow
forecasting
Future cash
flows
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (“CODM”). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments and make strategic decisions, has been identified as the Directors of the
Group. In the opinion of the Directors, the operations of the Group comprise two operating segments comprising
firstly of that of developer of gas to power projects in the Republic of Indonesia and secondly with projects within
the UK. The Group considers that it only has one reportable segment and the Directors consider that the primary
financial statements presented substantially reflect all the activities of the Company.
23
6 Administrative expenses
Administration fees and expenses consist of the following:
Audit fees
Bad debts
Professional fees
Administration costs
Employee costs
Directors’ fees (Note 9)
Other administrative expenses
Office costs
Consulting and farm-in expenses
Travel and accommodation
Asset evaluation expenses
7 Earnings per share
2021
US$’000
2020
US$’000
69
-
1,047
104
219
1,100
2,539
30
6
11
47
32
117
241
49
-
(146)
293
13
(36)
46
23
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Loss attributable to owners of the Group (USD thousands)
Weighted average number of ordinary shares in issue (thousands)
Loss per share (US cents)
2021
(2,854)
188,796
(1.51)
2020
(1,231)
1,107,577
(0.11)
In accordance with International Accounting Standard 33 ‘Earnings per share’, no diluted earnings per share is
presented as the Group is loss making. Details of potentially dilutive share instruments are detailed in notes 8
and 14.
8 Share-based payment arrangements
The following is a summary of the share options and warrants outstanding and exercisable as at 30 April 2021 and 30
April 2020 and the changes during each year:
Outstanding and exercisable at 1 May 2020
Cancelled options
Options granted as consideration
Warrants granted with share issue
Outstanding and exercisable at 30 April 2020
Cancelled options
Expired warrants
Options granted as consideration – pre consolidation
Warrants granted – pre consolidation
Consolidation – options
Consolidation – warrants
Options granted post consolidation
Warrants granted with share issue
Outstanding and exercisable at 30 April 2021
24
Number of
options and
warrants
125,983,175
(30,000,000)
68,750,000
32,904,758
197,637,934
(2,186,897)
(3,529,413)
93,750,000
39,057,099
(150,300,000)
(142,432,339)
83,710,000
45,553,120
161,259,504
Weighted
average exercise
price (Pence)
1.294
(0.304)
0.104
0.026
1.120
(1.92)
(5.00)
0.30
0.03
-
-
2.60
2.60
3.41
The above weighted average exercise prices have been expressed in pence and not cents due to the terms of
the options and warrants. The following share options or warrants were outstanding and exercisable in respect
of the ordinary shares:
Grant Date
Expiry Date
1 May
2019
Issued
Expired
30 April
2020
Exercise
Price
Warrants
13.05.16
31.01.17
31.01.17
31.01.17
22.05.17
22.05.17
31.07.17
19.08.17
01.09.17
06.12.17
29.04.18
03.08.18
13.05.21
31.01.22
31.01.22
31.01.22
22.05.22
22.05.22
31.07.22
19.08.22
01.09.22
06.12.22
29.04.21
02.08.21
Consolidation
20.09.18
20.09.18
15.03.19
21.06.19
21.06.19
02.07.19
03.07.19
Options
05.06.15
20.09.21
20.09.21
14.03.22
20.06.22
20.06.22
01.07.22
02.07.22
05.06.18
Consolidation
01.10.18
01.02.20
01.10.23
01.02.25
42,000,000
10,000,000
8,000,000
6,666,666
15,000,000
35,000,000
150,000,000
90,769,231
70,769,231
638,569,604
264,705,882
300,000,000
(1,598,851,001)
5,217,391
34,782,608
16,666,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,059,856
10,833,334
3,178,235
833,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42,000,000
10,000,000
8,000,000
6,666,666
15,000,000
35,000,000
150,000,000
90,769,231
70,769,231
638,569,604
264,705,882
300,000,000
(1,598,851,001)
5,217,391
34,782,608
16,666,666
18,059,856
10,833,334
3,178,235
833,334
34,344,865
(33,657,968)
36,000,000
-
125,983,175
-
-
-
68,750,000
101,654,759
-
-
(30,000,000)
-
(30,000,000)
34,344,865
(33,657,968)
6,000,000
68,750,000
197,637,934
0.20p
0.20p
0.25p
0.30p
0.10p
0.10p
0.10p
0.06p
0.06p
0.05p
0.017p
1.00p
1.15p
2.00p
0.45p
0.155p
0.155p
0.157p
0.157p
0.40p
2.00p
0.30p
25
Grant Date
Expiry Date
1 May
2020
Issued
Expired
30 April
2021
Exercise
Price
Warrants
13.05.16
31.01.17
31.01.17
31.01.17
22.05.17
22.05.17
31.07.17
19.08.17
01.09.17
06.12.17
29.04.18
03.08.18
13.05.21
31.01.22
31.01.22
31.01.22
22.05.22
22.05.22
31.07.22
19.08.22
01.09.22
06.12.22
29.04.21
02.08.21
Consolidation
20.09.18
20.09.18
15.03.19
21.06.19
21.06.19
02.07.19
03.07.19
10.12.20
31.03.21
20.09.21
20.09.21
14.03.22
20.06.22
20.06.22
01.07.22
02.07.22
09.12.23
31.03.26
Consolidation
19.04.21
19.04.21
Options
05.06.15
19.04.24
19.04.26
05.06.18
Consolidation
01.10.18
01.02.20
01.02.20
08.07.020
01.10.23
01.02.25
01.02.25
08.07.25
Consolidation
19.04.21
19.04.26
42,000,000
10,000,000
8,000,000
6,666,666
15,000,000
35,000,000
150,000,000
90,769,231
70,769,231
638,569,604
264,705,882
300,000,000
(1,598,851,001)
5,217,391
34,782,608
16,666,666
18,059,856
10,833,334
3,178,235
833,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
545,455
38,511,644
-
-
21,488,500
24,064,620
34,344,865
(33,657,968)
6,000,000
68,750,000
-
-
-
-
-
-
68,750,000
25,000,000
-
197,637,934
83,710,000
262,070,219
-
-
-
-
-
-
(150,000,000)
-
-
-
(264,705,882)
-
406,411,764
-
-
-
-
-
-
-
-
-
(137,667,632)
-
-
(34,344,865)
33,657,968
(1,500,000)
-
-
-
(150,300,000)
-
(298,448,647)
42,000,000
10,000,000
8,000,000
6,666,666
15,000,000
35,000,000
-
90,769,231
70,769,231
638,569,604
-
300,000,000
(1,192,439,237)
5,217,391
34,782,608
16,666,666
18,059,856
10,833,334
3,178,235
833,334
545,455
38,511,644
(137,667,632)
21,488,500
24,064,620
-
-
4,500,000
68,750,000
68,750,000
25,000,000
(150,300,000)
83,710,000
161,259,504
0.20p
0.20p
0.25p
0.30p
0.10p
0.10p
0.10p
0.06p
0.06p
0.05p
0.017p
0.02p
1.15p
2.00p
0.45p
0.155p
0.155p
0.157p
0.157p
0.22p
0.00p
2.60p
2.60p
0.40p
2.00p
0.30p
0.30p
0.03p
2.60p
The options and warrants issued during year were valued using the Black-Scholes valuation method and the
assumptions used are detailed below. The expected future volatility has been determined by reference to the
historical volatility:
Grant
date
Share
price at
grant
Exercise
price
Volatility
Option
life
Dividend
yield
Risk-free
investment
rate
Fair value
per option
01.02.20
08.07.21
19.04.21
1.15p
1.85p
2.40p
3.00p
3.00p
2.60p
40%
95%
70%
5 years
5 years
5 years
0%
0%
0%
3%
0.7%
0.7%
0.13p
1.19p
1.33p
26
The Group recognised US$1,609,000 (30 April 2020: US$nil) relating to equity-settled share-based payment
transactions during the year arising from Option or Warrant grants, which was charged US$838,000 (2020:
US$nil) in respect of services performed in connection with the issue of new shares charged to share premium,
US$667,000 (2020: US$nil) in respect of directors’ fees and US$104,000 (2020: US$nil) in respect of employee
costs to the income statement. Shares totalling US$570,000 were issued to three of the Directors following the
share raise and re-admission to AIM on 19 April 2021 in relation to options earned during the period.
The 83,710,000 options granted on 19 April 2021 will vest on 1 January 2022 and 1 January 2023 in equal
amounts. Vesting of the options is subject to the option holder providing continuous service during the vesting
period and there are no other performance conditions attached to the options.
There were 68,750,000 of unvested options at the 30 April 2020 held by current Directors and consultants, which
vested on 1 February 2021.
For the share options and warrants outstanding as at 30 April 2021, the weighted average remaining contractual
life is 4.14 years (30 April 2020: 3.42 years).
9 Employee benefits (including directors)
The group employed an average of 5 individuals during the year, including the directors (2020: 5).
Directors’ remuneration (see below)
Share based payments – Directors (see below)
Share based payments – Employees
Directors’ health insurance
Employees
2021
US$’000
409
667
104
24
115
1,319
2020
US$’000
(149)
-
3
-
(146)
Key management of the Group are considered to be the Directors.
The remuneration of the directors during the year ended 30 April 2021 was as follows:
Pension
contribution
Share
Total
based
2021
payments
US$’000 US$’000 US$’000
64
302
376
2
326
3
3
1,076
4
231
234
-
196
1
1
667
-
-
3
-
-
-
-
3
Ross Warner
Mark Rollins
Leslie Peterkin
Graham Smith
Stephen West
Steve Whyte
Larry Bottomley
Total Key Management
Short term
employee
benefits
US$’000
60
71
139
2
97
2
2
373
Social
security
payments
US$’000
-
-
-
-
33
-
-
33
27
The remuneration of those in office during the year ended 30 April 2020 was as follows:
Short term
employee
benefits
US$’000
150
135
15
30
27
39
12
408
Social
security
payments
US$’000
-
-
-
-
-
4
-
4
Ross Warner
Simon Gorringe
Mark Rollins
Leslie Peterkin
Graham Smith
Robert Arnott
Daniel Jorgensen
Total Key Management
10 Income tax expense
Pension
contribution
(248)
(227)
Waiver
Total
2020
of fees
US$’000 US$’000 US$’000
(98)
(92)
15
30
27
44
(75)
(149)
-
-
-
-
-
1
-
1
(87)
(562)
The Company is resident for tax purposes in the Isle of Man and is subject to Isle of Man tax at the current rate
of 0% (2020: 0%).
Taxation reconciliation
The charge for the year can be reconciled to the loss per the consolidated statement of comprehensive
income as follows:
Loss before income tax
Tax on loss at the weighted average corporate tax rate of 0% (2020: 0%)
Total income tax expense
2021
US$’000
2020
US$’000
(2,854)
(1,231)
-
-
-
-
The deferred tax asset has not been recognised for in accordance with IAS 12. The Group does not have a
material deferred tax liability at the year end.
28
11 Business combination
On 19 April 2021, Advance Energy plc, via its wholly owned subsidiary Advance Energy TL Limited, acquired a
50% equity interest in Carnarvon Petroleum Timor Unipessoal Lda which in turn is the holder of a 100% working
interest in, and the contractor of, the Buffalo Production Sharing Contract (“PSC”).
Details of the purchase consideration and the net assets acquired are as follows:
Purchase consideration
Cash paid
Purchase costs
Total
The assets and liabilities recognised as a result of the acquisition are as follows:
Rights *
Buffalo exploration & appraisal
Property, plant and equipment
Cash
Creditors
Loan payable to Carnarvon
Net identifiable assets at acquisition
Less: Other interests
Goodwill
Net assets acquired
2021
US$’000
20,000
274
20,274
Fair value
2021
US$’000
21,149
1,685
1
20,023
(31)
(2,278)
40,548
(20,274)
-
20,274
* Carnarvon Petroleum Timor Unipessoal Lda owns the Buffalo Oil Field re-development project located in the
Buffalo PSC Contract Area (the “Buffalo Project”) and is the Contractor and Operator of the Buffalo PSC. The
rights attached to this have been fair valued by Advance Energy in determining the purchase price
apportionment.
Equity investment in associate
Carrying value at beginning of year
Additions
Share of losses post acquisition
Carrying value at year end
Summarised financial information for associate
2021
2020
US$’000 US$’000
-
-
-
-
-
20,274
(12)
20,262
The table below provide summarised financial information for those associates that are material to the group.
The information disclosed reflects the amounts presented in the financial statements of the relevant associate
and not Advance Energy’s share of those amounts. They have been amended to reflect adjustments made by
the entity when using the equity method, including fair value adjustments and modifications for differences in
accounting policy.
29
Summarised balance sheet at 30 April 2021
Rights
Buffalo exploration & appraisal
Property, plant and equipment
Cash
Creditors
Loan payable to Carnarvon
Net assets
Group’s share as a %
Carrying amount
Summarised statement of comprehensive income for the 12 months to 30
April 2021
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Finance costs
Loss on ordinary activities before taxation
Taxation
Loss from continuing operations
Group share of post acquisition losses
12 Financial assets at fair value through profit or loss
Fair value at beginning of year
Additions
Impairment
Fair value at year end
2021
US$’000
21,148
1,794
1
20,023
(58)
(2,375)
40,533
50%
20,267
2021
US$’000
-
-
-
(391)
(391)
(1)
(392)
-
(392)
(12)
2021
2020
US$’000 US$’000
-
604
(604)
-
-
-
-
-
On 29 April 2018 the Company entered into a subscription agreement with Eagle Gas Limited, a UK private
company that held licence P2112. Under this agreement the Company acquired a 14.75% interest in Eagle Gas
Limited. During the year to 30 April 2019 the Company increased its holding in Eagle Gas Limited to a 25%
interest. Management considered this to provide significant influence over the entity and the asset was
reclassified to that of an associate investment.
Eagle Gas Limited, with support from its joint venture partner secured a 3-month extension to the P2112 licence
but failed in the end to secure a farminee. The licence was subsequently dropped, and the licence area has now
been put back into the OGA’s open acreage and will be available for application in the next licencing round. As
such, the investment was provided for in full during the prior year.
30
Eagle Gas Limited’s wholly owned subsidiary Holywell Resources Limited (“Holywell”) re-applied for acreage
covering the Badger prospect as well as additional complementary areas in the 32nd Licence Round. The OGA
announced the results of the 32nd Round in September 2020, with the Company's wholly owned subsidiary
Resolute Oil & Gas (UK) Limited and Holywell each being awarded, subject to documentation, a 50% working
interest in block 43/25 and part-blocks 43/29, 43/30, 48/4 and 48/5. Accordingly, Advance Energy holds a non-
operated indirect 62.5% interest in these blocks once they have been formally issued. In November 2020 the
Board decided not to proceed with these opportunities and expects the subsidiary Resolute (and therefore
indirectly the North Sea Licences) will be sold to a third party for a nominal sum without further expenditure on
such assets by the Company.
In June 2019 the Company entered into a Service Agreement for production on the Betun-Selo KSO field in
Sumatra, Indonesia with PT Petroenim Betun-Selo and PT Celebes Artha Ventura. As a result of disappointing
production performance of the field the company did not realise any incremental production beyond April 2020.
The investment was fully impaired on 31 October 2020.
13 Other investments
Value at beginning of year
Additions
Impairment
Value at year end
2021
US$’000
-
-
-
-
2020
US$’000
267
-
(267)
-
The capitalised cost in the prior period related to the acquisition of an 8% interest in the Colter project via a farm-in.
The agreement to farm-in to the Colter licences was entered into on 20 September 2018. The cost to Advance
Energy of farming into the licence, included the funding of the back costs on the licence, together with the
obligation to fund 10.67% of the forward costs related to this well. Following disappointing results in the area, all
historic capitalised expenditure in relation to this amount was written off during the year to 30 April 2020.
14 Capital and reserves
All shares are Nil Coupon fully paid and each ordinary share carries one vote. No warrants have been exercised
at the reporting date.
Allotted, called-up and fully paid:
Balance at 30 April 2019
02/07/2019 – Equity Placing
Cost of issue
11/07/2019 – Equity Placing
Cost of issue
23/12/2019 – Equity Placing
Cost of issue
04/02/2020 – Equity Placing
Removal of warrants
Balance at 30 April 2020
12/11/2020 – Equity Placing
Cost of issue
19/04/2021 – Consolidation 1:10
19/04/2021 – Equity Placing
Cost of issue
19/04/2021 – Accrued Director fee shares
Balance at 30 April 2021
Number
603,970,170
373,333,333
-
66,666,666
-
166,666,667
-
349,999,998
-
1,560,636,834
157,780,151
-
(1,546,575,287)
840,100,000
-
15,672,310
1,027,614,008
Pence per
share
0.150
-
0.150
-
0.150
-
0.150
-
0.22
-
-
2.60
-
2.60
Share
premium
US$’000
16,878
705
(73)
126
(6)
320
(16)
683
48
18,665
470
(24)
-
30,549
(2,574)
570
47,656
31
15 Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business. Accounts payable are classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the
effective interest method.
Trade payables
Accruals and other payables
16 Risk Management
Financial Risks
2021
US$’000
2020
US$’000
517
621
1,138
299
24
323
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency exchange
risk and interest rate risk), credit risk and liquidity risk. The Board of Directors seek to identify and evaluate
financial risks.
Market risk
A. Foreign currency exchange risk
Foreign exchange risk arises because the Group entities enter into transactions in currencies that are
not the same as their functional currencies, resulting in gains and losses on retranslation into US Dollars.
It is the Group’s policy to ensure that individual Group entities enter into local transactions in their
functional currency wherever possible and that only surplus funds over and above working capital
requirements should be transferred to the treasury of the Parent Company. The Group and Company
considers this policy minimises any unnecessary foreign exchange exposure. Despite this policy the
Group cannot avoid being exposed to gains or losses resulting from foreign exchange movements, at
the reporting date a 5% decrease in the strength of the US Dollar would result in a corresponding
reduction of US$373,000 (2020: US$18,000) in the net assets of the Group.
B. Cash flow interest rate risk
The Group’s cash and cash equivalents are invested at short term market interest rates. As market rates
are low the Group is not subject to significant cash flow interest rate risk and no sensitivity analysis is
provided. The Group is also not subject to significant fair value interest rate risk. No interest rate
sensitivity has been presented in respect of the outstanding convertible loan note as it is considered not
material.
32
Cash & Cash Equivalents
USD
GBP
Total Financial Assets
Trade & other payables
USD
CHF
GBP
AUD
Total Financial Liabilities
2021
US$'000
2020
US$'000
646
7,457
8,103
858
-
219
61
1,138
11
551
562
310
1
12
-
323
Credit risk
Credit risk arises on investments, cash balances and receivable balances. The amount of credit risk is
equal to the amounts stated in the Statement of Financial Position for each of these assets. Cash
balances and transactions are limited to high-credit-quality financial institutions. There are no
impairment provisions as at 30 April 2021 (2020: nil).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close
out market positions. The Group has adopted a policy of maintaining surplus funds with approved
financial institutions.
Management of liquidity risk is achieved by monitoring budgets and forecasts against actual cash flows.
Where the Group entered into borrowings during the year management monitor the repayment and
servicing of these arrangements against the contractual terms and reviewed cash flows to ensure that
sufficient cash reserves were maintained.
Capital Risks
The Directors determine the appropriate capital structure of the Group, specifically, how much is raised
from shareholders (equity) and how much is borrowed from financial institutions (debt), in order to
finance the Group’s business strategy. The Group’s policy in the long term is to seek to maintain the
level of equity capital and reserves to maintain an optimal financial position and gearing ratio which
provides financial flexibility to continue as a going concern and to maximise shareholder value. The
capital structure of the Group consists of shareholders’ equity together with net debt (where relevant).
The Group’s funding requirements are met through a combination of debt, equity and operational cash
flow.
33
17 List of subsidiaries and associates
The parent of the Group has shareholdings in the following entities:
Name
Interest
2021
Interest
2020
Country
of
incorporation
Nature of business
Advance Energy TL Limited
Carnarvon Petroleum Timor Unipessoal Lda
Resolute Oil & Gas (UK) Limited
Eagle Gas Limited
100%
50%
100%
25%
N/A
N/A
100%
25%
UK
Timor-Leste
UK
UK
Intermediate Hold Co
Oil exploration
Trading subsidiary
Gas Exploration
18 Commitments
There were no capital commitments authorised by the Directors or contracted other than those provided for in
these financial statements as at 30 April 2021 (30 April 2020: None).
19 Related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control
the party or exercise significant influence over the party in making financial and operating decisions, or vice
versa, or where the Group and the party are subject to common control or common significant influence.
Related parties may be individuals (being members of key management personnel, significant shareholders
and/or their close family members) or other entities and include entities which are under significant influence
of related parties of the Group where those parties are individuals, and post-employment benefit plans which
are for the benefit of employees of the Group or of any entity that is a related party of the Group.
Details of Directors remuneration are disclosed in Note 9 Directors Remuneration. For details of any related
party transactions entered into after the year-end please refer to Note 20 Subsequent Events.
As at 30 April 2021 the following balances were included in trade and other payables and were outstanding in
respect of Directors remuneration or remuneration incurred prior to their appointment as a Director at the year
end.
Outstanding at
30 April
2021
US$’000
-
-
-
Outstanding at
30 April
2020
US$’000
12
2
14
Daniel Jorgensen
Graham Smith
Total Key Management
20 Subsequent events
There were no events after the end of the reporting period which require adjustment to or disclosure within the
financial statements.
34
Statement of Compliance with the QCA Corporate Governance Code
(The information contained in this document was last reviewed on 21 September 2021)
In addition to information given in this Statement the Board of Advance Energy plc (the “Company”) are
continually monitoring the position regarding the COVID-19 pandemic and will provide Company updates via
the RNS service as appropriate.
Introduction
The Board of Advance Energy plc fully endorses the importance of good corporate governance and applies the
QCA Corporate Governance Code, published in April 2018 by the Quoted Companies Alliance (the “QCA Code”),
which the Board believes to be the most appropriate recognised governance code for a company of the
Company’s size with shares admitted to trading on the AIM market of the London Stock Exchange.
The Chairman is responsible for leading an effective board, fostering a good corporate governance culture,
maintaining open communications with the major shareholders and ensuring appropriate strategic focus and
direction for the Company.
Notwithstanding the Board’s commitment to applying the QCA Code, we will not seek to comply with the QCA
Code where strict compliance in the future would be contrary to the primary objective of delivering long-term
value for the Company’s shareholders and stakeholders. However, we do consider that following the QCA Code,
and a framework of sound corporate governance and an ethical culture, is conducive to long-term value creation
for the Company’s shareholders.
All members of the Board believe strongly in the importance of good corporate governance to assist in achieving
objectives and in accountability to the Company’s stakeholders. In the statements that follow, the Company
explains its approach to governance in more detail.
Principle One
Business Model and Strategy
As announced on 17 December 2020, in accordance with the Company’s strategy to focus on growth through
acquisition or farm-in to non-operated interests in upstream projects, the Company entered into a conditional
Buffalo Subscription Agreement pursuant to which the Company’s wholly owned subsidiary, Advance Energy TL
Limited (“AETL”) subscribed for equity such that AETL holds 50 per cent. of the total equity interest in Carnarvon
Petroleum Timor for a consideration of US$20 million. Carnarvon Petroleum Timor holds a 100 per cent. working
interest and is the contractor under the Buffalo PSC, offshore Timor-Leste. Carnarvon Petroleum Timor is a
subsidiary of ASX listed company, Carnarvon Petroleum Limited.
In conjunction with this, the Company placed 840,100,000 Placing Shares at the Placing Price of 2.6 pence to
raise total gross proceeds of £21,842,600 (approximately US$30,033,575), part of which funded the subscription
into Carnarvon Petroleum Timor. The Acquisition and the Placing (“RTO”) were approved by Shareholders at the
Extraordinary General Meeting of the Company held on 16 April 2021.
Unlocking hidden value is the Company’s main objective - to the benefit of shareholders as well as our joint
venture partners, host governments, and broader stakeholders.
Many upstream assets present challenges to existing operators. These difficulties may be technical in nature,
misalignment in the partnership, suboptimal commercial arrangements, or simply funding constraints.
One, or a combination, of these issues can present the opportunity for realisation of added value. The Company
looks to identify such assets and maximise their value using unique insights from original technical work,
commercial acumen or advantaged relationships.
The Company seeks to take non-operated interests in joint ventures, ideally with only two parties, with the
ability to exert a significant degree of influence. The Company only works with established operators eliminating
35
many of the execution risks present for typical early stage, high growth companies, and can focus on what really
adds value rather than day-to-day operational concerns. There is no need to build a large and complex
organisation, keeping overheads low and preserving value for shareholders.
Principle Two
Understanding Shareholder Needs and Expectations and Build Trust
The Board is committed to maintaining good communication and having constructive dialogue with its
shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide
feedback at meetings with the Company. The Company is required to hold an Annual General Meeting (“AGM”)
in each year, which gives investors the opportunity to enter into dialogue with the Board and for the Board to
receive feedback and take action if and when necessary. Where voting decisions are not in line with the
Company’s expectations the Board intends to engage with those shareholders to understand and address any
issues as appropriate. Investors also have access to current information on the Company though its website.
Shareholders can engage with the Company through its email address info@advanceplc.com and @advanceplc
on Twitter.
Investors also have access to current information on the Company through its website, www.advanceplc.com.
Principle Three
Considering wider stakeholder and social responsibilities
The Board is aware that engaging with its stakeholders strengthens relationships and assists it to make better
business decisions to deliver its commitments. The Company’s stakeholders include shareholders, members of
staff, suppliers, contractors, regulators, and the surrounding communities where its projects are located.
The Board is regularly updated on wider stakeholder views and issues concerning its projects both formally at
Board meetings and informally through conversations. Engagement in this manner enables the Board to receive
feedback and equips them to make decisions affecting the business.
The Board recognises the importance of its social responsibilities concerning its investment decisions, and the
Company will develop projects that seek to make a contribution to the development of communities in which
they are located. In planning its activities, the Company will give consideration to evaluating the social impact
of proposed developments with a view to promoting where possible local employment and the delivery of other
local benefits and mitigating negative impacts to the extent possible.
Principle Four
Risk Management
In addition to its other roles and responsibilities, the Board is responsible for ensuring that procedures are in
place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the
Company and to ensure that risk management is reflected in Board remuneration.
The Company’s focus on near term value creation means it is easier to control risks, limiting exposure to long
term commodity price trends, as well as the potential for value to be stranded as the result of a future changing
world energy mix or climate change initiatives.
The Group’s operations expose it to a variety of risks that include volatility of commodity prices, foreign currency
volatility, operational risks, availability of finance and funding.
The Group has a risk management programme in place that seeks to limit the adverse effects on the financial
performance of the Group by monitoring levels of debt finance and the related finance costs.
Risk is monitored, assessed and managed by the Board as a whole who are responsible for ensuring that the
financial performance of the Company is properly monitored and reported. This process includes reviews of
annual and interim accounts, results announcements, internal control systems, procedures and accounting
policies.
36
The Board identifies and evaluates financial risks in close co-operation with the managers who are a highly
experienced team who can focus on the key issues to maximise value and de-risk Company projects.
The key risk factors for the Company are contained in pages 33-34 of the Company’s 2021 Annual Report and
Accounts (“2021 Accounts”).
Principle Five
A Well Functioning Board of Directors
The Board comprises, Mark Rollins non-executive Chairman and director, Leslie Peterkin Chief Executive Officer
and executive director, and Stephen West Chief Financial Officer and executive director. Ross Warner, Stephen
Whyte and Larry Bottomley serve as non-executive directors. Executive and Non-Executive Directors are subject
to re-election at the Company’s AGM in accordance with the Company’s Articles of Association. The letters of
appointment of all Directors are available for inspection at the Company's registered office during normal
business hours. The Directors are expected to provide as much time to the Company as is required. The Board
elects a Non-Executive Chairman to chair every meeting.
All
the Directors biographies are published on
https://www.advanceplc.com/about-us/board-management/
the Company’s website and outlined below:
The Company has established subcommittees of the Board, comprising an Audit Committee, a Remuneration
Committee, a Nomination Committee and an AIM Rules and UK MAR Compliance Committee.
The Board aims to hold monthly meetings. A schedule of attendance at Board meeting is outlined as follows:
Leslie
Peterkin
X
X
X
X
-
X
X
X
X
X
X
X
X
X
X
X
X
-
X
Mark
Rollins
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Stephen
Whyte3
Larry
Bottomley4
X
X
Board Meetings Attendance
Board
Meetings
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Date
7 May 2020
8 Jun 2020
7 Jul 2020
6 Aug 2020
9 Sept 2020
21 Sept 2020
7 Oct 2020
5 Nov 2020
12 Nov 2020
3 Dec 2020
16 Dec 2020
7 Jan 2021
9 Feb 2021
9 Mar 2021
12 Mar 2021
22 Mar 2021
30 Mar 2021
16 Apr 2021
20 Apr 2021
Ross
Warner
X
X
X
X
X
X
X
X
-
X
X
X
X
X
X
X
-
-
X
1 Resigned 1 June 2020
2 Appointed 1 June 2020
3 Appointed 19 April 2021
4 Appointed 19 April 2021
Graham
Smith1
X
Stephen
West2
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
37
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of six Directors. On 1 June 2020, the Company announced a Board re-organisation
with the appointment of Stephen West as the Chief Financial Officer and executive director and the resignation
of Graham Smith as non-executive director of the Company. Stephen Whyte and Larry Bottomley joined the
Board as independent non-executive directors on 19 April 2021.
The Board believes that the current balance of skills of the Directors reflects a very broad range of commercial
and professional skills across geographies and industries that is necessary to ensure the Company is equipped
to deliver is strategy and notes that each of the Director's has experience in public markets.
The Directors keep their knowledge and expertise current through their intensive involvement in industry affairs.
Additionally, the Directors receive ad hoc guidance on certain matters concerning the AIM Rules for Companies
from the Company’s Nomad as well as receiving updates on the regulatory environment from FIM Capital
Limited (“FIM”).
Full Biographies of the Board are available on the Company’s website www.advanceplc.com
The Company has engaged the outsourced services of FIM to provide Company secretarial, specialist
administration and accounting services to the Company.
Principle Seven
Evaluation of Board Performance
There is no formal Board or director evaluation system in place, however, there is an internal evaluation of the
Board and individual directors undertaken on an ad hoc basis in the form of peer appraisal and discussions to
determine the effectiveness and performance as well as the directors' continued independence. This process
can be regular as part of the board meeting process or ad hoc when the director or Board deem it necessary.
The results and recommendations that come out of the appraisals for the directors shall identify the key
corporate and financial targets that are relevant to each director and their personal targets in terms of career
development and training. Progress against previous targets shall also be assessed where relevant.
Principle Eight
Corporate Culture
The Board recognises that their 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 and the way that
employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure
that the Company delivers long term value to its shareholders and that shareholders have the opportunity to
express their views and expectations for the Company in a manner that encourages open dialogue with the
Board.
The Company maintains an open and respectful dialogue with employees, partners and other stakeholders.
Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to
successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life
and seeks to ensure that this flows through all that the Company does. The Directors consider that at present
the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and
constructive challenge.
The Company has put policies in place that communicate disciplinary policies clearly; ensures every employee
knows the consequences of unethical behaviour; ensures its employees can report misconduct anonymously
and has a confidential complaint process in place.
The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for
Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded
on AIM and is in accordance with the requirements of the Market Abuse Regulation.
38
Principle Nine
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company's activities rests with the Board and the respective
responsibilities of the Non-Executive Chairman. The Board has adopted appropriate delegations of authority
which set out matters which are reserved to the Board.
The Non-Executive Chairman is responsible for the effectiveness of the Board together with the responsibility
to oversee the Company’s corporate governance practices.
The Board formed an audit committee and remuneration committee on 7 October 2020 and then subsequently
following the completion of the RTO and appointment of Larry Bottomley and Stephen Whyte reviewed the
audit committee and remuneration committee structures and additionally formed a nomination committee and
an AIM Rules and UK MAR compliance committee.
Role of the Audit Committee: the Committee is chaired by Stephen Whyte, with the other participating member
of the committee being Ross Warner.
The Audit Committee aims to meet at least three times each year. The Audit Committee is responsible for
assisting the Board’s oversight of the integrity of the financial statements and other financial reporting, the
independence and performance of Lubbock Fine, the regulation and risk profile of the Group and the review and
approval of any related party transactions.
The Audit Committee may hold private sessions with management and Lubbock Fine without management
present. Further, the Audit Committee is responsible for making recommendations to the Board on the
appointment of Lubbock Fine and the audit fee and reviews reports from management and Lubbock Fine on the
financial accounts and internal control systems used throughout the Company and the Group.
The Audit Committee also reviews arrangements by which the staff of the Company and the Group may, in
confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and
ensure that arrangements are in place for the proportionate and independent investigation of such matters with
appropriate follow-up action. Where necessary, the Audit Committee will obtain specialist external advice from
appropriate advisers.
Role of the Remuneration Committee: the Committee is chaired by Larry Bottomley, with the other
participating member of the committee being Mark Rollins.
The Remuneration Committee meets up to twice a year. The Remuneration Committee is responsible for
considering all material elements of remuneration policy, the remuneration and incentivisation of Executive
Directors and senior management (as appropriate) and to make recommendations to the Board on the
framework for executive remuneration and its cost. The role of the Remuneration Committee is to keep under
review the Company’s remuneration policies to ensure that the Company attracts, retains and motivates the
most qualified talent who will contribute to the long-term success of the Company. The Remuneration
Committee also reviews the performance of the CEO and CFO and sets the scale and structure of their
remuneration, including the implementation of any bonus arrangements, with due regard to the interests of
shareholders. The Remuneration Committee is also responsible for granting options under the Company’s share
option plan and, in particular, the price per share and the application of the performance standards which may
apply to any grant, ensuring in determining such remuneration packages and arrangements, due regard is given
to any relevant legal requirements, the provisions and recommendations in the AIM Rules and the QCA Code.
Role of the Nomination Committee: the Committee is chaired by Mark Rollins, with the other participating
member of the committee being Stephen Whyte.
The Nomination Committee meets at least three times a year at appropriate intervals. The Nominations
Committee is responsible for reviewing and making proposals to the Board on the appointment of directors,
reviewing succession plans and ensuring that the performance of directors is assessed on an ongoing basis.
39
Role of the AIM Rules and UK MAR Compliance Committee: the Committee is chaired by Ross Warner, with the
other participating member of the committee being Larry Bottomley.
The AIM Rules and UK MAR Compliance Committee monitors the Company’s compliance with the AIM Rules
and UK MAR and seek to ensure that the Company’s Nominated Adviser is maintaining contact with the
Company on a regular basis and vice versa. The committee will ensure that procedures, resources and controls
are in place with a view to ensuring the Company’s compliance with the AIM Rules and UK MAR. The committee
also ensures that each meeting of the Board includes a discussion of AIM matters and assesses (with the
assistance of the Company’s Nominated Adviser and other advisers, as appropriate) whether the Directors are
aware of their AIM responsibilities from time to time and, if not, ensures that they are appropriately updated
on their AIM responsibilities and obligations.
The services of each of the Board members as directors are provided under the terms of their letters of
appointment. The responsibilities of the board members are outlined in the Accounts and summarised below.
The directors are responsible for maintaining proper 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 Isle of Man Companies Act
2006. They are also responsible for the system of internal control, for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the Isle of Man governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Whilst there are no formal adoption of matters reserved for the Board, the Directors review and approve the
following:
Strategy and management
Policies and procedures
Financial reporting and controls
Capital structure
Contracts
Shareholder documents / Press announcements
Adherence to Corporate Governance and best practice procedures
The structures and risk appetite disclosures on the website and the Accounts are deemed sufficient in relation
to the size and strategy of the Company.
Non-Executive Directors
The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and
which have been observed throughout the year. These provide for the orderly and constructive succession and
rotation of the Non-Executive Chairman and non-executive directors insofar as both the Non-Executive
Chairman and non-executive directors will be appointed for an initial term of three years and may, at the Board's
discretion, believing it to be in the best interests of the Company, be appointed for subsequent terms.
Principle 10
Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders
The information provided to shareholders regarding updates on the Company via regulatory announcements
are also considered to be sufficient, taking into consideration the size and low activity level of the Company.
The Company communicates with shareholders through the Accounts, full-year and half-year announcements,
the shareholders meetings and investors can email the directors and Company Secretary with any queries they
40
may have. The Company maintains an enquiries email address (info@advanceplc.com) and has a twitter account
(@advanceplc), details of which are displayed on its website.
All historical information is maintained on the website along with shareholder updates.
The Company’s financial reports and notices of General Meetings of the Company for the last five years can be
found here http://www.advanceplc.com/investor-relations/corporate-documents/
The outcome of all resolutions tabled at general meetings are to be posted on the Company’s website and also
announced via RNS.
If a significant proportion of independent votes were to be cast against a resolution at any general meeting, the
Board’s policy would be to engage with the shareholders concerned in order to understand the reasons behind
the voting results.
41
CORPORATE INFORMATION
Directors
Company Number
Registered Office
Independent Auditors
Company Secretary
Stock Exchange Listing
Financial & Nominated Adviser
Joint Brokers
Mark Rollins
Leslie Peterkin
Ross Warner
Stephen West
Larry Bottomley
Stephen Whyte
010493V
55 Athol Street
Douglas
Isle of Man
IM1 1LA
Lubbock Fine LLP
Paternoster House
65 St Paul's Churchyard
London EC4M 8AB
FIM Capital Limited
55 Athol Street
Douglas
Isle of Man
IM1 1LA
AIM, London Stock Exchange
Ticker code: ADV
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
Optiva Securities Limited
49 Berkeley Square
London
W1J 5AZ
Tennyson Securities Limited
20 Fenchurch Street
London
EC3M 3BY
42