Annual Report and Financial Statements 2020
Responsibly supporting
the energy transition
for the benefit of all
www.afentraplc.com
Afentra plc (‘Afentra’ or the ‘Company’), together
with its subsidiary undertakings (the ‘Group’), is an
upstream oil and gas Company listed on the AIM
market of the London Stock Exchange.
The Company has a refreshed strategy built around
achieving scale through the acquisition of both
operated production assets and discovered resources
resulting from the accelerating energy transition in
Africa, where the Company and its new management
has extensive operational experience. The Company
currently has the high potential onshore Odewayne
exploration block that is operated by Genel Energy,
where its 34% interest is fully carried.
CONTENTS
Overview
Our Mission
2020 Summary
Chairman’s Statement
Chief Executive Officer’s Statement
Strategic Report
Operations Review
Asset Summary
Financial Review
Business Risk
Corporate Governance
Board of Directors
Statement of Corporate Governance
Audit Committee Report
Nominations Committee
Remuneration Committee Report
Extractive Industries Transparency Initiative
Directors’ Report
Statement of Directors’ Responsibilities
Group Accounts
Independent Auditors’ Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Company Statement of Financial Position
Company Statement of Changes In Equity
Company Statement of Cash Flows
Notes to the Financial Statements
Definitions and Glossary of Terms
Professional Advisors
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Why Afentra? This stands for ‘African energy transition’.
What better way to signal our Company’s ambition than to bind it into the
name? Our name is our purpose compressed into seven letters. Our emblem
is a contemporary representation of the Sankofa story and also of transition
in forward motion – with a nod to where we’ve come from. It’s our visual
statement of intent: re-evaluate what we’ve learnt in the past to advance
positive, sustainable change everywhere we operate.
1
Annual Report and Financial Statements 2020 2
Afentra plc Overview
Year ended 31 December 2020
3
Annual Report and Financial Statements 2020 Our mission
Our mission is to be the trusted partner of both IOCs and host
governments in the divestment of “legacy” assets. By managing these
assets responsibly we turn these fields or discoveries into profitable assets
by applying focus, innovation, efficient operating practices and smart
commercial arrangements. We use our approach to unleash the full asset
potential whilst also reducing carbon emissions, promoting growth through
employment and facilitating socio-economic development.
4
Afentra plc 2020 Summary
Operations
Financial
Post year end
Throughout 2020:
Odewayne block, Somaliland
– The Company continued
to support the Operator in
progressing the technical
understanding of the block.
Afentra continued to review
its technical assessment
and outlook on block
prospectivity.
Cash resources net to the
Group at 31 December
2020 of $42.7 million (2019:
$44.9 million).
The Group remains debt
free and fully funded for all
commitments.
Adjusted EBITDAX 1: loss for
the Group of $761k (2019:
$917k loss).
2020 focus on capital
discipline, general and
administrative overheads
(‘G&A’) expenses reduced
by 15% to $2.2 million (2019:
$2.6 million).
18 February 2021: Several
institutional and high net
worth investors purchased
the shares sold by Waterford
Finance and Investment
Limited (equating to its entire
29.23% shareholding in the
Company) and Mistyvale
Limited (equating to its
entire 15.66% shareholding in
the Company).
16 March 2021: Paul McDade
and Ian Cloke join the Board
of Directors as CEO and
COO respectively.
30 March 2021: Jeffrey
MacDonald and Gavin Wilson
join the Board of Directors as
Independent non-executive
Chairman and Independent
non-executive Director
respectively.
13 April 2021: The Company
announced its intention
to change its name from
Sterling Energy plc to Afentra
plc and adopt new articles of
association. The proposed
changes were approved at
the General Meeting held on
30 April 2021.
5 May 2021: Afentra plc
launched and Anastasia
Deulina is appointed as Chief
Financial Officer.
1 defined within the definitions and
glossary of terms on pages 81 - 82.
5
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts The Company has developed a clear,
straightforward, yet impactful, strategy
that we believe this team is uniquely
positioned to execute.
The team are presently screening a
pipeline of assets to identify opportunities
that meet the strategic criteria. It is the
hope of the Board that we will be able to
update you on our first acquisition in the
next 12 months and, rest assured, our
priority will be to ensure we execute the
right deal for our shareholders.
These recent changes are exciting
developments for the Company and
I am wholly confident that Afentra
has a well-defined strategy tailored to
the current and future outlook for the
industry and a leadership team with
the requisite experience, drive and
capabilities to deliver long-term value for
our shareholders and positive outcomes
for all the stakeholders involved in the
African energy transition.
I thank shareholders for their support
through these changes and the Board
looks forward to engaging with all of you
as we progress our strategy.
Jeffrey MacDonald
Chairman
26 May 2021
Chairman’s Statement
Dear Shareholders
I am delighted to be providing the first
statement in my role as Chairman,
and indeed the first statement for the
Company in its new form as Afentra.
Your Company has undergone a
complete transformation in recent
months following the arrival of the
new Executive team led by CEO Paul
McDade. This transformation has
resulted in a significant shift in the
shareholder register and an ongoing
restructuring of the Board. This process
of change culminated in the recent
General Meeting where you approved
the renaming of the Company to
Afentra plc which was followed by its
successful relaunch.
The name Afentra, which stands for
African Energy Transition, reflects the
Company’s strategic imperative of
capitalising on opportunities resulting
from the accelerating energy transition
on the African continent. Afentra has
been established to support sustainable
change in the African energy industry,
a sector that needs further responsible,
well managed, independent operators.
The new Executive team have presented
this very clear strategy for the Company
and it is fully supported by the Board.
business. Afentra has been established
to support an efficient and responsible
energy transition on the continent that
delivers positive outcomes for all the
stakeholders, including the investors
who backed Afentra to achieve these
objectives. Indeed, a robust ESG agenda
is embedded into the core fabric of our
business model and operating structure,
as it reflects our purpose and will support
our ability to achieve our vision.
The energy transition globally is well
documented and IOCs are changing
their business models as they pivot
towards lower-carbon footprints, driven
by societal and investor pressure.
This factor does not alter the current
importance of oil and gas within the
energy mix and the requirement for them
to continue to be produced to meet
global demand, enable transition and
allow the developing countries in Africa
to continue to benefit from the revenues
they generate. In order to enable a
responsible transition, credible operators
must position themselves as appropriate
acquirers of these assets, so that the
assets and host governments can
continue to realise the positive benefit
and impact of quality operators ensuring
best practice, environmental stewardship
and transparent governance.
As detailed in the recent launch
communications, the structural changes
in the oil and gas industry across Africa
present exciting opportunities for agile,
ambitious and credible operators such as
Afentra, but they also present significant
risks and challenges to the environment
and the socio-economic impact for the
countries and people of the continent
if the transition is not managed
responsibly. This critical point is both
the opportunity and purpose of the
The Board is confident that it has an
exceptional leadership team with a
proven track record for operational
excellence, value creation and
stakeholder engagement across Africa.
Their network amongst the target
stakeholder audiences of IOCs and
host governments, coupled with their
experience of managing the sub-surface
and above ground risks on the continent,
represent the strong foundation of
Afentra’s investment proposition.
6
Afentra plc “The energy transition globally is well
documented and IOCs are changing
their business models as they pivot
towards lower-carbon footprints, driven
by societal and investor pressure.”
7
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Chief Executive Officer’s Statement
“Ultimately, we are seeking to acquire quality
producing assets and discovered resources that
can be optimised through innovative operating
techniques to enhance production, extend
field life, realise hidden value and reduce their
environmental impact.”
I would like to express how pleased I am
to take on the role as your new CEO
and for the support that I have received
from both long-term shareholders and
those who have more recently invested
in our Company. I am very excited about
the journey we are embarking upon and
the opportunities that the global energy
transition combined with the changes
in the African upstream environment
present. We are determined to use
these opportunities to transform (build)
Afentra into a responsible, well managed,
independent upstream operator.
The global energy transition is rightly at
the forefront of global consciousness
and the oil and gas industry is seeking
to play its part in terms of reducing
carbon footprint and transparently
communicating the impact of its
activities. Although climate change is
rightfully the principle consideration
of the global energy transition, there
are other key factors that need to
be considered to enable a smooth
and responsible transition. We need
to ensure that the continued global
demand for hydrocarbons can be
delivered in a responsible manner, and
that the developing countries, whose
socio-economic development relies on
these resources, can continue to benefit
from the associated revenues. This is
particularly true in Africa, a continent with
vast discovered resources, where the
population is growing fast and yet where
many hundreds of millions of people
remain without access to reliable power.
As the upstream industry in Africa
progresses through its natural cycle,
assets will be divested by IOCs and
there will be a requirement for credible
operators to acquire these assets. Our
vision is to establish Afentra as a leading
pan-African operator with an unwavering
commitment to operational and
subsurface excellence, environmental
stewardship, transparent governance,
positive socio-economic impact, and
strong sustainable shareholder returns.
To deliver this vision, Afentra has
assembled a highly experienced
leadership team with a proven track
record of oil and gas operations across
Africa. This team have witnessed
previous industry transition cycles in
both the North Sea and Gulf of Mexico,
this provides valuable insights into how
to capitalise on the African transition. A
simple review of the operating landscape
in the North Sea today, versus twenty
years ago, demonstrates the importance
of many smaller independents
established specifically to capitalise on
the North Sea energy transition. The
African industry transition is in its early
stages, but it is expected to mirror what
has happened in the North Sea. I see
Afentra being a key player supporting a
smooth transition to ensure the desired
outcomes for all stakeholders.
A key driver of our approach is to ensure
the African countries can continue
to benefit from the positive impact of
their natural resources through this
accelerating energy transition. This
social aspect is not as well understood
or publicised, yet it is a critical factor
when considering the broader aspects
of ESG and ethical investment. The
8
Afentra plc environmental aspect of the global
energy transition is better understood,
and Afentra will strive to balance both
the socio-economic and environmental
implications of the energy transition. Our
approach is simple, we intend to position
the Company as a credible counterparty
for IOCs to divest to, and a quality
partner for host governments to work
with to enhance the benefits from their
upstream assets.
Ultimately, we are seeking to acquire
quality producing assets and discovered
resources that can be optimised through
innovative operating techniques to
enhance production, extend field life,
realise hidden value and reduce their
environmental impact. Through this
diligent approach, Afentra can turn
“legacy” producing fields and discovered
resources into highly profitable assets
capable of delivering strong cash flow for
reinvestment and shareholder returns.
The assets we are targeting are mid to
late life producing assets or discovered
resources across Africa, with a particular
focus on West Africa. We are seeking
operated positions, but will also
consider non-operated opportunities
alongside credible operators with shared
standards. We are largely commodity
agnostic, however anticipate that oil
will be the main emphasis given the
opportunities we know to exist in our
target markets. Our goal is to announce a
transaction in the next twelve months.
In parallel to the growth strategy we
will continue to appraise our existing
asset in Somaliland with a view to
establishing additional value on behalf
of shareholders. Given the asset profile
is early stage exploration we need to
carefully consider its positioning within
our stated strategy and ensure that we
maximise the value of this asset which
benefits from a full carry by our partner.
We see a clear market driver for our
business model and believe we have
assembled the right team, with a clear
and focused strategy, capable of
capitalising on this opportunity for the
benefit of all stakeholders. Importantly,
we remain pragmatic about the
challenges that are facing the oil and
gas industry and have factored these
into the establishment of our business
model, to ensure we mitigate risks and
meet stakeholder expectations.
I’d like to thank the Sterling Energy team
that have endured a very difficult 2020
due to the challenges caused by the
global covid pandemic, this was combined
by the uncertainties surrounding the
changes within the Company. They have
shown dedication and professionalism
throughout this period and have been
very supportive and welcoming to myself
and the new members of the team.
We are all looking forward to working
as the new Afentra team and share our
excitement about the journey we are
embarking on together.
Paul McDade
Chief Executive Officer
26 May 2021
9
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts 10
Afentra plc Strategic Report
Year ended 31 December 2020
11
Annual Report and Financial Statements 2020 Operations Review
“Since late 2015 the Company has exited
non-core exploration portfolio assets and
removed outstanding liabilities, to provide a
simpler and rejuvenated platform for M&A
led growth. The Group retains a fully carried
exposure to the frontier Odewayne block in
Somaliland and a clear strategy for future
M&A growth.”
SOMALILAND
Somaliland offers one of the last
opportunities to target an undrilled
onshore rift basin in Africa. The
Odewayne block, with access to Berbera
deepwater port less than a 100km to the
north, is ideally located to commercialise
any discovered hydrocarbons. A 2D
geophysical survey acquired in 2017 and
reprocessed in 2019, along with field data
and legacy geological field studies, are
the focus of the Company’s 2021 work
programme to determine if a Mesozoic
age sedimentary basin is present in the
block and its prospectivity.
Odewayne exploration block (W.I. 34%)
Overview
This large, unexplored, frontier acreage
position covers 22,840km2, the
equivalent of c. 100 UK North Sea
blocks. Exploration activity prior to the
2017 regional 2D seismic acquisition
program has been limited to the
acquisition of airborne gravity and
magnetic data and surface fieldwork
studies, with no wells drilled on block.
The Company’s wholly owned subsidiary,
Sterling Energy (East Africa) Limited
(‘SE(EA)L’), holds a 34% working interest
in the PSA (fully carried by Genel Energy
Somaliland Limited for its share of the
costs of all exploration activities during
the Third and Fourth Periods of the PSA).
The Odewayne production sharing
agreement was awarded in 2005. It is in
the Third Period, with a 1,000km, 10km
by 10km 2D seismic grid acquired in
2017 by BGP. The Third Period has been
further extended, through the 8th deed
of amendment (as mentioned on page
15). This data was reprocessed in 2019
and is currently being reviewed after the
disruption caused by Covid in 2020.
In 2H 2021 the Company will review
the reprocessed 2D seismic data
set in and will update its technical
assessment and outlook on block
prospectivity accordingly. Alongside
the seismic reprocessing review, the
Operator is undertaking a number
of work streams and it is anticipated
12
Ian Cloke
Chief Operating Officer
that these will aid the JV partnership
in developing an appropriate forward
work program to further evaluate the
prospectivity of the licence.
Outlook on buy and build strategy
In March 2021 the Company shifted
focus to support a responsible energy
transition in Africa by establishing
itself as a credible partner for divesting
IOCs and Host Governments. The
Company is specifically targeting
producing assets and discovered
resources in Africa. The focus will be
on operated positions but will also
consider non-operated positions
alongside credible operators with
shared standards.
Afentra plc 13
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Asset Summary
Somaliland – Odewayne
Yemen
Aden
Djibouti
Djibouti
Block M-11
Gulf of Aden
Somaliland
SL9, SL12
RAK Gas
Odewayne
Genel Energy /
Afentra / Petrosoma
SL10B, SL13
Genel Energy
SL18
DNO
Afentra Licence
200 Km
Ethiopia
Somalia
Indian Ocean
14
Afentra plc Contract Summary
Contract type
Contract signed
PSA
Participants
6 October 2005
Genel Energy Somaliland Limited (Operator)
Contract effective date
6 October 2005
Contract area
Exploration term
22,840km2
Afentra plc - SE(EA)L
Petrosoma Limited
Current Period 3: to 2 November 2020 (extended to
May 2023, see licence status). Period 3 work commitment:
500km 2D seismic acquisition
50%
34%
16%
Period 4 (optional): to 2 May 2022 Period 4 work commitment:
1,000km 2D seismic acquisition and one exploration well
Period 5 (optional): to 2 May 2023 Period 5 work commitment:
500km 2D seismic acquisition and one exploration well
Period 6 (optional): to 2 May 2024 Period 6 work commitment:
500km 2D seismic acquisition and one exploration well
Production term
Twenty five years, renewable for additional ten years.
State participation
State may back in for up to a 20% participating interest in any development and production area.
Licence status
The block is in the Third Period of the exploration term. The Group’s costs associated with the Third and Fourth period work
programmes are fully carried by Genel Energy Somaliland Limited.
The Third Period expiry, as described in the 8th Amendment to the PSA, is currently extended by 2 years, as are all subsequent
periods. Current expiry date of the Third Period is therefore May 2023.
15
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts
Financial Review
Year ended 31 December 2020
Selected Financial Data
Adjusted EBITDAX
Loss after tax
Year end cash net to the Group
Year end share price
$million
$million
$million
Pence
2020
(0.8)
(1.9)
42.7
9.4
2019
(0.9)
(1.6)
44.9
8.7
Non-IFRS measures
The Group uses certain measures of performance that are not specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include capital investment, debt and adjusted EBITDAX.
Income statement
Group G&A decreased by 15% during the year to $2.2 million (2019: $2.6 million). The reduction in the Group’s administrative
overhead is in keeping with the Board’s 2020 mandate for cash preservation.
In 2020, a portion of the Group’s staff costs and associated overheads have been expensed as pre-licence expenditure ($1.2 million),
or capitalised/recharged ($74k) where they are directly assigned to capital projects or recharged. This totalled $1.3 million in the year
(2019: $1.4 million).
Interest received during the year was $326k (2019: $1.1 million). The reduction year on year was as a result of the global pandemic
amongst other factors including, banks increasing their liquidity levels which resulted in a reduction on deposit rates. Net finance
income (finance income less finance expenses) totalled $268k in the year (2019: $1.0 million).
The loss for the year was $1.9 million (2019: loss $1.6 million):
Loss for year 2019
Decrease in G&A and pre-licence costs
Decrease in finance income
Loss for year 2020
$
million
(1.6)
0.4
(0.7)
(1.9)
16
Afentra plc Adjusted EBITDAX and net loss
Group adjusted EBITDAX loss totalled $761k (2019: $917k loss):
Loss after tax (page 54)
Interest and finance costs
Depletion and depreciation
Pre-licence costs
Total EBITDAX (Adjusted)
2020
$ million
2019
$ million
(1.9)
(0.3)
0.2
1.2
(0.8)
(1.6)
(1.0)
0.2
1.4
(0.9)
The basic loss per share was 0.9 cents per share (2019: loss 0.7 cents per share). No dividend is proposed to be paid for the year
ended 31 December 2020 (2019: $nil).
Statement of financial position
At the end of 2020, non-current assets totalled $22.1 million (2019: $22.1 million) the majority of which relates to the Odewayne block
($21.2 million).
Net assets/total equity stood at $63.9 million (2019: $65.8 million).
Net current assets reduced to $42.5 million (2019: $44.5 million). At the end of 2020 cash and cash equivalents totalled $42.7 million
(2019: $44.9 million), the reduction being related to G&A overheads offset by interest received.
Cash flow
Total net decrease in cash and cash equivalents in the year was $2.2 million (2019: $1.5 million), a full reconciliation of which is
provided in the Consolidated Statement of Cash Flows on page 57.
During the year there were minimal cash investments on the Odewayne Block in Somaliland due to the Group’s interest being fully
carried by Genel Energy Somaliland Limited for its share of the costs during the Third and Fourth Periods of the PSA.
Accounting standards
The Group has reported its 2020 and 2019 full year accounts in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006.
Cautionary statement
This financial report contains certain forward-looking statements that are subject to the usual risk factors and uncertainties
associated with the oil and gas exploration and production business. Whilst the Directors believe the expectation reflected herein to
be reasonable in light of the information available up to the time of their approval of this report, the actual outcome may be materially
different owing to factors either beyond the Group’s control or otherwise within the Group’s control but, for example, owing to a
change of plan or strategy. Accordingly, no reliance may be placed on the forward-looking statements.
17
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Business Risk
Principal business risks
The long-term success of the Group depends on its ability to manage its asset portfolio and to find, acquire, develop and/or
commercially produce new oil and natural gas reserves. In achieving its long-term success, the Group is exposed to a number of
risks and uncertainties which could have a material impact on the Company’s performance. Key to mitigating the risks faced by
the Company is ensuring Afentra has the correct Board and senior management team in place who regularly review the business,
approve the annual work programme and budget as well as consider monthly management reporting, financial operating procedures,
health, safety, security and environment (‘HSSE’) and other important factors. The Directors regularly monitor all risks to the
Company using information obtained or developed from external and internal sources and will take actions as appropriate to mitigate
these. The Group utilises a risk management system that identifies key business risks and measures to address these risks. The
Company proactively implements such measures considered appropriate on a case-by-case basis.
The Company’s strategic risk and operational risks remained the same over the past year with no changes in the Company’s portfolio.
The Directors have identified the following principal risks and mitigations in relation to the Group’s future performance:
Category
Risk
Mitigation
Change
Financial,
Commercial and
Economic
• Low
commodity
prices
• Market volatility
• Counterparty
• Continued lower oil and gas commodity
prices and market volatility.
• Difficulty in capital raising for new
acquisitions and/or to fund development
activities.
• Licence extension uncertainty. Licences,
permits or approvals may be difficult to
obtain and sustain.
distress
• Fiscal instability.
• Foreign currency risk.
• Group maintains a strong balance sheet
and remains fully funded for its existing
commitments.
• Management continually assess all existing
assets and proposed new acquisitions
in light of future capital requirements
from a disciplined lifecycle investment
perspective.
• Management maintains an active dialogue
with existing and prospective investors
• The new management has a strong track
record of successful fundraisings
• The Group holds the majority of its cash in
US dollars, the predominant currency used
in oil and gas operations.
►
18
Afentra plc Category
External
• Country risk
• Climate change
• Legal
compliance
Risk
Mitigation
Change
• The Group’s assets are located in a non-
OECD country. Governments, regulations,
and the security environment may
adversely change, including the use of tax
claims, real or not. The Group’s assets in
Somaliland have been or are affected by
country-specific situations.
• The regulation of the energy industry to
address climate change is increasingly
international in scope and application. The
Group’s activity focuses on finding and
producing carbon based fuels often with
long investment and production lifecycles.
• Complex Legal and Regulatory Compliance
or litigation risk.
• Failure to recruit and retain key personnel
and/or engage in adequate succession
planning.
• Human error or deliberate negative action.
• The Company is reliant on its IT systems to
maintain operations and communications.
• The Board monitors political, regulatory
and HSSE changes and engages third-
party expertise as required. The Group has
objectives to acquire additional core assets,
to assist in diversifying jurisdictional risk.
• New investments are considered in the light
of changing environmental regulations, fiscal
volatility and geopolitical dynamics.
• Management considers climate-related
strategic and financial risks in its future
growth strategy (including potential
acquisitions), including the potential impact
of both transition and physical risks.
• The Company accords the highest
importance to corporate governance
matters and operates to high ethical
standards.
• Activities are subject to various different
jurisdictional laws, customs, fiscal and
administrative regulations.
• Legal risk assessment and due diligence
(where appropriate) is undertaken for all
counterparties the Company deals with.
• The Company employs suitably experienced
and qualified staff and, when required,
external advisors to ensure full compliance.
• The Company is seeking to build depth of
experience in all key functions to ensure
continuity
• The Company engages specialist IT support
• Protection against external intrusion is
incorporated within the system and tested
regularly.
►
19
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Risk
Mitigation
Change
Business Risk (cont.)
Category
Strategic
• Concentration
of portfolio
• Competition
• Group’s remaining asset (Somaliland) is
concentrated on early stage frontier and
basin exploration and production within the
African continent.
• Competitors have significantly greater
financial and technical resources.
• Concentration of shareholder base.
• Failure to negotiate optimal contract terms.
•
Inadequate management processes.
• Financial control of non-operated assets.
• Fraud, bribery and corruption / increased
third party exposure.
•
Inappropriate or poorly conceived corporate
strategy and failure to deliver on such
strategy including failure to access new
opportunities.
Operational
• Exploration activities may not result in a
• Exploration and
production risk
• Operator and
partner risk
commercial discovery.
• The Group is dependent on other operators
for the performance of E&P activities, due
to lack of control. This may result in delay in
conducting work programmes.
• HSSE incidents or non-compliance under
local rules and/or laws.
• The Board is actively seeking to diversify
the current portfolio risk by acquiring
appraisal, development and/or producing
assets, using existing financial resources
of the Group and additional capital (as
required).
• The Board is pursuing an M&A strategy
and conducts detailed due diligence prior
to engagement with any prospective
transaction.
• Ongoing engagement with shareholders
to inform investment decisions (including
representatives on the Board).
• Key documentation and contract terms are
considered by the Board to ensure the best
possible outcomes are achieved.
• Management regularly monitor and amend
cost structure, investment strategy and
treasury policy.
• The Board meets regularly to review the
business plan, G&A expenses, strategy and
monthly reporting.
• Management aims to diversify and manage
risk across a portfolio of assets, applying
the Group’s experience, expertise and
appropriate technology to minimise risk
through the asset lifecycle.
• The Group carefully considers the
technical, HSSE and financial capabilities of
operators and potential partners during any
JV farm-out or new opportunity acquisition.
Covid-19
Pandemic
• Staff may become ill or require themselves
to be quarantined, excessive numbers of
which may limit the Company’s ability to
continue its normal operations.
• There are no Afentra staff on the ground
at the Odewayne asset. All staff are
based in the UK with access to advanced
healthcare and the NHS.
• World Health Organisation procedures
designed to limit staff exposure and isolate
those suspected of contracting the virus
alongside the implementation of enhanced
hygiene and sanitation protocols have
been put in-place for UK based staff. All
UK staff are able to work from home when
required and following UK Government
guidelines.
▲ Increased ▼ Decreased ► Unchanged
20
►
►
▲
Afentra plc Internal control
The Directors are responsible for establishing and maintaining the Group and the Company’s systems of internal control including
financial and compliance controls and risk management. These are designed to safeguard the assets of the Group and to ensure the
reliability of financial information for both internal use and external publication.
The Group’s internal control procedures include Board approval for all significant expenditure. All major expenditures require either
senior management or Board approval at the appropriate stages of each transaction. A system of regular reporting of the state of
the Group’s financial affairs provides appropriate information to management to facilitate control. The Board reviews, identifies,
evaluates and manages the significant risks that face the Group.
Any systems of internal control can only provide reasonable, and not absolute, assurance that material financial irregularities will be
detected or that the risk of failure to achieve business objectives is eliminated. The Directors, having reviewed the effectiveness
of the system of internal financial, operational and compliance controls and risk management, consider that the system of internal
control operated effectively throughout the financial year and up to the date the financial statements were signed.
The Audit Committee, on an annual basis, reviews the need for an internal audit function. Given the nature of the Company’s
business and assets, the current internal control procedures in place and the size of the Company, the Board are satisfied that an
internal audit function is unnecessary at this time.
Company Policies
The Directors are mindful of the impact of the Company’s business on its employees and contractors, the environment and on the
wider community. In particular, it notes the following with respect to HSSE, corporate responsibility, business integrity, community
responsibility and employees.
Health, safety, security and environment
Core competency of the Group
• Every individual to be aware of his/her responsibility towards providing a safe and
secure working environment;
• Managed through staff training and procedures to reduce HSSE risks as low as
reasonably practical;
• Appropriate emergency response systems are in place to reduce and mitigate the
impact and losses of any incident; and
• Ensure compliance with all relevant laws, regulations and industry standards.
JV partners
• The Group maximises its influence with JV partners to share its HSSE and social
responsibility values; and
• Contractors are required to demonstrate and deliver a credible HSSE and social
responsibility programme.
Environmental
• The Group is committed to minimising its impact on the environment in both field
operations and within its offices; and
• All staff share responsibility for monitoring and improving the performance
of its environmental policies with the objective of reducing our impact on the
environment on a year-on-year basis.
21
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Business Risk (cont.)
Corporate responsibility
Conducting business in a responsible
and sustainable way
• The Group has corporate, environmental and social responsibilities to the
indigenous communities in the areas in which it operates, to its partners, to its
employees and to its shareholders; and
•
In pursuing its business objectives, it undertakes not to compromise its Corporate
Social Responsibility with any of these stakeholders.
Business Integrity
Conducting business with integrity,
honesty and fairness
• Highest ethical standards are a cornerstone of the Group’s business;
• All business activities are reviewed to ensure they meet our standards;
• The Group also seeks to ensure that similar standards are applied by its business
partners, contractors and suppliers; and
• All members of staff are individually accountable for their actions to ensure that
they apply and maintain these standards.
Community Responsibility
Committed to being a good partner in
the communities in which we operate
• Engagement and dialogue with local stakeholders to ensure that, as far as possible,
projects benefit both the Group and the communities in which the project is located.
Employees
Workplace free of discrimination
• All employees are afforded equal opportunities and are rewarded on merit and ability;
• All employees are given contracts with clear and fair terms; and
• Staff are offered access to relevant training and encouraged to join professional
bodies to enhance their knowledge, competencies, career development and
opportunities for progression.
Culture of openness
• High standards of conduct, accountability and propriety; and
• Employees can report legitimate concerns without fear of penalty or punishment.
Whistleblowing Policy
Empowers employees to be proactive
• Employees able to make anonymous reports directly to the Senior independent
non-executive Director; and
• Employees are encouraged to report any failure to comply with legal obligations or
the Group’s regulations, dangers to health and safety, financial malpractice, damage
to the environment, criminal offences and actions which are likely to harm the
reputation of the Group.
Antibribery and Corruption Policy
Committed to using only legitimate
means to further business interests
• The Company commits not to offer, promise, pay or accept bribes in order to obtain
unfair advantage;
• Remuneration, payments and commissions shall be for legitimate business reasons; and
• Systematic procedure supporting the Policy to reduce the risk of bribery and
corruption to as low as reasonably practicable.
22
Afentra plc Section 172 Statement
A director of a company must act in a way they consider, in
good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing
so have regard (amongst other matters) to the following factors:
• The likely consequences of any decision in the long-term,
• The interests of the company’s employees,
• The need to foster the company’s business relationships
with suppliers, customers and others,
• The impact of the company’s operations on the
community and the environment,
• The desirability of the company maintaining a reputation
for high standards of business conduct, and
• The need to act fairly between members of the Company.
The Board has regard to the provisions of s.172 of the
Companies Act 2006 in carrying out their duties and have
regard to the matters set out in s.172 (a) – (f) in the decisions
taken during the year ended 31 December 2020.
Our stakeholder engagement
The Board identifies a number of key stakeholders of the
Company: JV partners; regulators and government partners;
communities where our assets are located; shareholders; and our
employees. During the year the Company actively engaged with its
identified key stakeholders.
The Company is committed to engaging positively with the
communities in which our assets are located and looks to
support those communities relevant to our operations.
As set out on page 12 the Company has worked closely with
Genel Energy, focused on the reprocessing of the entire 2D
seismic dataset acquired in 2017 to PSTM. The Company will
continue engage with the Operator in relation to this asset now
the dataset has been delivered to the JV.
The Company has a small team of employees and consultants
based in the UK all of whom have direct contact with the head
of Human Resources who engages with the workforce and
reports directly to the COO. Board meetings are held in the
UK office where a number of employees and consultants are
invited to join the meeting from time to time. The Board have
day-to-day business interactions with various employees of the
Group so receive direct employee feedback and engagement.
The Directors regularly engage with investors via the AGM
and at other times during the year. Continued access to the
capital markets is key to the success of the Company’s M&A
strategy therefore the management team and the Board
work to ensure that the Company’s investors have a sound
understanding of the Company’s strategy and ambitions and
how this may be implemented. Investors’ views are sought by
the Directors to guide the Company’s strategy and, in particular,
its M&A strategy. The Company’s M&A strategy has become
more targeted towards seeking particular assets in more
limited jurisdictions as discussed in the Chairman’s and CEO’s
statements on pages 6 – 9.
Principal decisions during 2020
During 2020 the Board retained its focus on reducing G&A
and engaged in robust treasury management to preserve the
Company’s capital to maximise the Company’s ability to deploy
capital into existing and new assets.
Key decisions made by the Board were in relation to
M&A opportunities with a significant focus on the likely
consequences of these decisions in the long-term as well as
looking how these decisions may affect communities and the
environment. As stated above investor feedback in relation to
the Company’s M&A strategy was considered as part of the
Board’s decision making in this area.
The Strategic Report was approved by the Board of Directors
on 26 May 2021 and signed on its behalf by:
Paul McDade
Chief Executive Officer
23
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts 24
Afentra plc Corporate Governance
Year ended 31 December 2020
25
Annual Report and Financial Statements 2020 Board of Directors
Executive team
Paul McDade
Chief Executive Officer
Ian Cloke
Chief Operating Officer
Anastasia Deulina
Chief Financial Officer
A Petroleum engineer with over 35 years
within the international oil & gas business
has provided Paul with a rich and diverse
set of relevant experiences. From his early
international experience in challenging
operational, social, security and safety
environments, to his 19 years as COO and
then CEO of Tullow Oil, he has essential
first-hand experience of what is required
to build a successful African-focused,
responsible oil & gas company.
His strong focus on delivering
stakeholder value, shared prosperity,
environmental performance and
strong governance, coupled with his
understanding of the role that Oil and
Gas has to play in both the global and
African energy transitions, makes him
the ideal leader to deliver Afentra’s
ambitious growth strategy, a company
that will have stakeholder objectives and
ESG embedded at its core.
A Geoscientist with over 25 years of
international Oil & Gas experience
and a proven track record of deploying
innovative technologies across global
upstream projects that positively impact
operational, technical and commercial
results for the benefit of all stakeholders.
As EVP at Tullow Oil, he led multi-cultural
and diverse teams focused on safely
improving production and operations at
pace across Africa and South America,
effectively managing risk and social-
environmental sensitivities whilst
embedding strong financial discipline.
He has first-hand experience in making a
difference in countries having discovered
and successfully delivered commercial
oil & gas in Uganda, Kenya and Guyana
amongst others. Having lived and travelled
throughout Africa, he has enjoyed the
full spectrum of life and business on the
continent, making him an ideal founding
partner and COO of Afentra.
Anastasia’s multicultural upbringing
and over 20 years of working in the
energy sector within global, multinational
investment banks, private equity and
corporates has given her extensive
experience in strategy development, deal
origination, structuring and execution,
M&A and business transformation.
Her primary focus is always on driving
sustainable business growth that has a
visible positive impact on the bottom-
line. This, along with her significant prior
Board experience, both as a NED and
committee member, and her strong global
business development and financial
network means that Anastasia provides
expert leadership as Afentra’s CFO.
26
Afentra plc Non-executive team
Jeffrey MacDonald
Independent non-executive Chairman
Gavin Wilson
Independent non-executive Director
Jeffrey MacDonald was a former
managing director with private equity
firm, First Reserve, with responsibility
for investment origination, structuring,
execution, monitoring and exit strategy,
with particular emphasis on the oil &
gas sector.
Gavin Wilson has held the position
of Investment Director at Meridian
Capital Limited, a Hong Kong based
international investment firm, for over a
decade, managing an oil & gas portfolio
focused on world-class assets in
emerging markets.
Before joining First Reserve, he was a
founder and CEO of Caledonia Oil &
Gas Ltd., a U.K. based exploration and
production firm, and a founding member
and managing director of Highland
Energy Ltd. Most recently he held the
position of Interim CEO and, prior to that,
non-executive Director, of Kris Energy.
Mr Wilson founded and managed, for over
seven years, two successful investment
funds - RAB Energy and RAB Octane.
Previously he was Managing Partner
of Canaccord Capital London’s Oil &
Gas division, responsible for Sales and
Corporate Broking/Finance.
27
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Statement of Corporate Governance
Afentra has been established to help facilitate a responsible energy
transition on the African continent that delivers positive outcomes for
all stakeholders. Our purpose is to support the African energy transition
as a responsible, well managed independent, enabling the continued
economic and social development of African economies and bridging
the gap to other/renewable forms of energy. We aim to be the trusted
partner of both IOCs and host governments in Africa in the divestment
of legacy assets.
Our approach is to manage those assets
responsibly, releasing the full asset
potential whilst also reducing carbon
emissions. We can only achieve these
objectives if robust ESG principles are
embedded into the core fabric of our
business model and operating structure.
The Board has been appointed to lead
the Company to achieve our purpose
and to work with the management team
to set out our culture and ensure we
succeed in our mission.
The Company follows the principles
of best practice set out in the Quoted
Companies Alliance Governance Code
(the ‘QCA Code’). The appropriate
Corporate Governance Code will remain
under review as the Company grows
and evolves and, as we are a new Board
supporting a new management team,
we are still in the process of finalising our
governance framework and embedding
our ESG principles and policies into our
business. Our governance structure
will continue to evolve over the coming
weeks and months and we will ensure
stakeholders remain informed though
regulatory announcements and updates
on our website.
Corporate culture
Afentra is building its business on
a strong ESG foundation and the
core elements of those principles
are being embedded in our strategy
and business model. Our vision it to
establish the Company as a leading
pan-African operator with an unwavering
commitment to operational excellence,
environmental stewardship, transparent
governance, positive socio-economic
impact, and strong sustainable
shareholder returns. Oil and gas remain
important in the energy mix and as IOCs
change their business models with a view
to developing a lower-carbon footprint
driven by societal and investor pressure,
these assets must continue producing
to meet global demand, enable an
effective energy transition and allow
the host countries to benefit from the
revenues they generate. Afentra seeks
to be a credible acquirer of these assets
enabling IOCs and host governments to
have confidence that those assets will
be managed in a responsible way, with
strong environmental stewardship and
transparent governance ensuring we
hold ourselves to account as a best-in-
class operator.
To implement our acquisition and growth
strategy we have a thorough due diligence
process to scrutinise opportunities
for their suitability. Initial high-level
screening covers subsurface, operational,
commercial and risk management
before progressing to more detailed
assessment of a potential target asset
against our acquisition criteria. The Board
is focused on reducing and managing
identified risks rather than eliminating
all risk. Any acquisition of hydrocarbon
assets inherently includes technical,
subsurface, operational, above ground
and commercial risks and the Board has
regard to such risks within its acquisition
parameters. The Board seeks to eliminate
HSSE risks and reputational risk.
28
Afentra plc Board composition
Following the transformation of the
Company earlier this year, the Board has
been completely refreshed with Jeffrey
MacDonald appointed as non-executive
Chairman and Paul McDade as CEO
who, together, will lead the Company in
delivering its strategic goal to become a
leading pan-African operator supporting
the African Energy Transition through the
acquisition of producing and stranded oil
and gas assets on the African continent.
Ian Cloke has been appointed as COO,
Gavin Wilson joined the Board at the
end of March as an independent non-
executive Director and Anastasia Deulina
was appointed CFO at the end of April.
The Chairman, Jeffrey MacDonald,
was independent on appointment and
the Board intend to appoint a further
independent non-executive Director
in the near future. Gavin Wilson holds
1.22% of the issued share capital of the
Company. He also has a consultancy
agreement in place with YF Finance
Limited who own 5.00% of the issued
share capital of the Company however
Gavin Wilson is not appointed to the
Board as a shareholder representative for
YF Finance, therefore the Board consider
him to be independent.
The Directors acknowledge that
shareholder expectation is that at
least half of the Directors of the Board
will be independent NEDs. Given the
recent significant Board changes
and the new strategic direction of
the Company, however, the Board
considers the current composition to
be appropriate for the Company at this
time. Composition of the various Board
Committees will also remain under
review and will change once a further
independent non-executive Director has
been appointed to the Board. Anastasia
Deulina has been appointed to the Audit
Committee on a temporary basis until
a further appointment has been made
with the requisite financial knowledge
and experience. Board and Committee
composition will be considered
again once the Company has begun
implementation of its acquisition and
growth strategy.
Functioning of the Board
The Board is responsible to the
shareholders for the proper management
of the Company. A Statement of
Directors’ Responsibilities in respect of
the financial statements is set out on
pages 44 -45.
Each Director takes their continuing
professional development seriously
and undertakes training from relevant
professional and industry bodies in the
form of attending seminars, conferences
and continual updates of knowledge and
industry practice. Each Director and the
employees of the Company are required
to undertake Anti-Bribery and Corruption
training on an annual basis as well as
regular updates on new and evolving
areas of governance and compliance.
The Directors have access to the
Company’s other advisors as required
including the Company Secretary, legal
advisors and auditors and have the
authority to obtain external advice as
deemed necessary. The Remuneration
Committee, upon appointment, have
sought advice from FIT Remuneration
regarding updating the Company’s
remuneration policy and further details
regarding this can be found in the
Remuneration Committee’s report
on pages 33 - 39. The Independent
non-executive Chairman is available to
all shareholders and staff if they have
concerns which, through the normal
channels of contact, have not been
resolved or for which such contact
is inappropriate. The Company has
not historically detailed the roles of
Chairman, non-executive Director and
Company Secretary however this will be
reviewed going forward. The CEO, CFO
and COO have contractual obligations to
the Company.
29
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Statement of Corporate Governance (cont.)
Conflicts of interest
Whilst conflicts should be avoided, the
Board acknowledges that instances
arise where this is not always possible.
In such circumstances, Directors are
required to comply with the Company’s
Conflicts of Interest Policy and notify the
Chairman before the conflict arises and
the details are recorded in the minutes.
If a Director notifies the Board of such
an interest, they may be, if requested by
the Chairman, excluded from any related
discussion and will always be excluded
from any formal decision.
Retirement and re-election
The Company’s Articles of Association
require that any Director who has been
a Director at the preceding two Annual
General Meetings and who had not
been appointed or re-appointed by the
Company, retire and stand for re-election.
All new Directors appointed since the
previous Annual General Meeting are
required to stand for election at the
following Annual General Meeting.
Meetings and time commitment
of the Board
The Board and each of the Board
Committees are provided with timely and
accurate information sufficiently ahead
of each scheduled Board and Committee
meeting to enable Board and Committee
members to have sufficient time to review
and analyse the information provided.
The Board meets at least five times a year
and in addition holds ad hoc meetings
to discuss urgent matters. The Audit
Committee meets at least once a year,
the Remuneration Committee will meet
at least once a year and the Nominations
Committee will meet as required.
The Chief Executive, Chief Operating
Officer and Chief Financial Officer are full-
time positions. Non-executive Directors
are expected to commit sufficient time
to ensure they are fully aware of the
Company’s affairs and it is expected that
this time commitment will vary over the
course of the term with intensive periods
requiring significant director focus.
Historical information regarding the
previous Board during the financial
year ended 31 December 2020
During 2020 the Board comprised
of Michael Kroupeev, non-executive
Chairman, David Marshall, CEO (until
December 2020), Tony Hawkins CEO
(appointed 4 December 2020), Leo
Koot, Senior Independent non-executive
Director and Ilya Belyaev, non-executive
Director. Tony Hawkins resigned from
the Board in March 2021 and Michael
Kroupeev, Leo Koot and Ilya Belyaev all
stepped down on 30 March 2021.
The following table summarises the
number of Board and committee
meetings held during the year ended 31
December 2020 and the attendance
record of the individual Directors who
were appointed to the Board during
2020:
Board
Meetings
Audit
Committee
Remuneration
Committee
Nominations
Committee
11
9
1
11
11
11
1
-
-
-
1
1
1
-
-
-
1
1
-
-
-
-
-
-
Number of meetings in year
David Marshall
Tony Hawkins
Michael Kroupeev
Leo Koot
Ilya Belyaev
No formal Board performance evaluation took place in 2020.
Jeffrey MacDonald
Independent non-executive Chairman
26 May 2021
30
Afentra plc Audit Committee Report
Members
This Committee currently
comprises:
• Gavin Wilson (Chairman)
• Anastasia Deulina (Chief
Financial Officer)
Committee composition
Anastasia is the CFO and will only
remain on the Committee until a further
independent non-executive Director
has been appointed with the requisite
financial experience.
During 2020 the Audit Committee
comprised Leo Koot and Ilya Belyaev.
The Audit Committee met once during
2020. The Auditors have unrestricted
access to the Chairman of the
Audit Committee. Audit Committee
meetings are attended by the Auditor
where and when appropriate and, by
invitation, the other Directors and
senior management.
Summary of responsibilities:
• monitoring the integrity of the
Group’s financial statements,
including review of the financial
statements of the Company
including its annual and half-
yearly reports and any formal
announcements relating to its
financial performance;
•
reviewing the effectiveness of the
Group’s financial reporting, internal
control policies and procedures for
the identification, assessment and
reporting of risk;
• monitoring the effectiveness of the
internal control environment;
• making recommendations to the
Board on the appointment of the
Auditors;
• making a recommendation to the
Board on Auditors’ fees;
• agreeing the scope of the Auditors’
annual audit programme and
reviewing the output;
• ensuring the independence of the
Auditors is maintained;
• assessing the effectiveness of the
audit process; and
• developing and implementing policy
on the engagement of the Auditors
to supply non-audit services.
During 2020 the Audit Committee
has considered the Group’s internal
control and risk management policies
and systems, their effectiveness and
the requirements for an internal audit
function in the context of the Group’s
overall risk management system. The
Committee is satisfied that the Group
does not currently require an internal
audit function; however, it will continue to
periodically review the situation.
An essential part of the integrity of
the financial statements lies around
the key assumptions and estimates or
judgments to be made. Key estimates
reviewed by the Committee during
2020 included the discount rate to be
used (IFRS 16, leases). The Committee
reviews key judgments prior to publication
of the financial statements, as well as
considering significant issues throughout
the year, which included the carrying value
of investments and impairment of assets
(IFRS 6, Exploration for and Evaluation
of Mineral Resources). The Committee
reviewed and was satisfied that the
judgments exercised by management
contained within the Report and Financial
Statements are reasonable.
The external audit function plays
an important part in assessing the
effectiveness of financial reporting and
internal controls, and the effectiveness
and quality of audit is of key importance.
Our Auditors, BDO LLP, have been in
place since 2010. The Committee notes
that it is considered best practice for
companies to put the external audit
contract out to tender at least every ten
years. In line with the audit profession’s
own ethical guidance, the current audit
engagement partner is due to rotate
off the Company’s account in the year
ending 31 December 2023, having
served for a period of five years. Having
considered the Financial Reporting
Council’s (‘FRC’s’) guidance, the
Committee’s current intentions are that it
will initiate a re-tendering process during
2021. The Committee has recommended
to the Board that shareholders support
the re-appointment of BDO LLP at the
2021 AGM.
Further disclosure relating to the
Auditors is set out within the Directors
Report on pages 41 – 43.
Details of fees payable to the Auditors
are set out in Note 4.
Gavin Wilson
Chairman of the Audit Committee
26 May 2021
31
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance
Director in fairly short order and
the Committee will then consider
the composition of the other Board
Committee’s and recommend any
changes to the Board.
The Committee is aware that the
composition of the Audit Committee
does not currently constitute best
practice and is not in-line with
recommended governance, however,
once further appointments to the
Board are made the Committee will
recommend changes to the composition
of this Committee, in particular.
I would like to thank our shareholders for
their support during this exciting time
for the Company as we drive towards
achieving our new purpose and delivering
on our new strategy.
Jeffrey MacDonald
Chairman of the Nominations
Committee
26 May 2021
Nominations Committee
Members
This Committee currently
comprises:
• Jeffrey MacDonald (Chairman)
• Gavin Wilson
• Paul McDade
Roles and responsibilities
The Committee is focused on Board
composition ensuring that Board and
Committee composition and balance
is optimal to allow Afentra to achieve
its vision and deliver its strategy to
its stakeholders. The Committee
considers best practice governance
taking into account the stage of
development of the Company.
Key responsibilities include:
• Reviewing the structure, size and
composition of the Board taking
into account the skills, knowledge,
experience and diversity of the
various Board members and making
recommendations to the Board
regarding any changes;
• Considering succession planning for
directors and senior management
and identifying and nominating for
approval of the Board any candidates
to fill Board vacancies as and when
they arise;
• Reviewing the leadership needs of
the Group, both executive and non-
executive with a view to ensuring
that the Company can continue to
deliver its strategy to stakeholders;
• Reviewing the time commitment
required from non-executive
Directors;
• Appointing any external advisors
to facilitate the search for
Board candidates or using open
advertising; and
• Facilitating Board evaluation.
Report on activities
The Committee is focused on ensuring
that the composition of the Board
is optimal to enable the Company
to achieve its purpose, to support
the African energy transition as a
responsible, well managed independent.
The Committee is confident that it has
an exceptional leadership team with
a proven track record for operational
excellence, value creation and
stakeholder engagement across Africa.
As the Company begins to deliver its
buy and build strategy to stakeholders
the Group will evolve as will Board and
Committee composition. For now, the
Committee is satisfied that, subject to the
appointment of a further non-executive
Director, the composition of the Board is
appropriate for the Company at this stage
of its development.
Following the complete refreshment
of the Board in March and April of this
year, the Committee will meet to review
the balance of skills, knowledge and
experience on the newly appointed
Board. The intention is to appoint a
further independent non-executive
32
Afentra plc
Remuneration Committee Report
I am pleased to present the Remuneration Committee’s report for 2020.
Following the appointment of an entirely new Board, including a new
executive team, this report is focused on the future, setting out how
the new Board will be remunerated to deliver our strategy and ensure
the Company fulfils its purpose to support the African energy transition
as a responsible, well managed independent, enabling the continued
economic and social development of African economies and bridging
the gap to other/renewable forms of energy.
Members
This Committee currently
comprises:
• Gavin Wilson (Chairman)
• Jeffrey MacDonald
Details of the Remuneration
Committee and its operation
The Remuneration Committee
makes recommendations to the
Board, within its agreed terms of
reference, on the structure and
quantum of remuneration packages for
executive Directors and it reviews the
remuneration for senior management.
The Committee consists entirely of
non-executive Directors and, where
appropriate, will invite other individuals
such as the Chief Executive, HR
Manager and external advisors
to attend meetings to provide
suitable context for its discussions.
Only members of the Committee
participate in discussions and reach
conclusions on matters for which
the Committee is responsible. No
member or attendee is authorised to
participate in matters relating to their
own remuneration.
Committee composition will remain
under review and may be subject
to change once the Company has
appointed a further independent non-
executive Director to the Board which
it intends to do in the near future. The
Company Secretary acts as secretary to
the Committee.
Summary of responsibilities:
•
recommending to the Board
a remuneration policy for the
remuneration of the Chairman,
non-executive Directors,
executive Directors and other
senior executives;
• within the agreed policy, determining
individual remuneration packages
for the executive Directors and
other senior executives;
• agreeing the policy on terms and
conditions to be included in service
agreements for the Chairman,
executive Directors, and other senior
executives, including termination
payments and compensation
commitments, where applicable; and
•
the approval of any employee
incentive schemes and the
performance conditions to be used
for such schemes including share
performance targets.
Advisors to the Committee
FIT Remuneration Consultants LLP
(FIT Remuneration) was appointed
following the transformation of the
Company in March 2021 to provide
advice to the Committee in respect
of the introduction and operation of
a new Remuneration Policy and the
drafting of this report. FIT is a member
and signatory of the Remuneration
Consultants Group and voluntarily
operates under the Code of Conduct
in relation to executive remuneration
consulting in the UK, details of which can
be found at:
www.remunerationconsultantsgroup.com
This report presents:
• The Directors’ Remuneration
Policy, which summarises the
Remuneration Policy which has
been introduced by the Committee
following the appointment of the
new Board; and
• The Annual Report on
Remuneration, which details
how the previous policy has been
applied in respect of the year ended
31 December 2020 and how the
Committee intends to operate the
new Policy going forwards.
33
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Directors’ Remuneration Policy
Following the new Board being appointed, the Remuneration Policy was reviewed and aligned to the Company’s new strategy,
purpose and vision and recognises the experience of the leadership team which has led the transformation of the Company and
facilitated the opportunity for shareholders and other stakeholders.
The executive team has created the opportunity for shareholders and the proposed founder share plan will reflect their commitment
to the new form of Afentra at its inception. Whilst the founder share plan and LTIP have not yet been established, it is intended that
these share plans are put in place over the course of the next few months. More details will be given to shareholders at the time
awards are made.
The revised Remuneration Policy is set out below.
Base salary
Purpose and link to strategy
To recruit and reward executives of the quality required and with appropriate skills to
manage and develop the Company and deliver the strategy.
Operation
• Base salary is normally reviewed annually taking into account the executive Directors’
Benefits
Purpose and link to strategy
Operation
performance, individual responsibilities and experience.
• The Committee may use market data where appropriate and will also consider
matters of retention, motivation and economic climate as well as the challenges
facing the business.
• The Committee will also consider pay increases awarded to the Company’s
employees when determining increases for the executive Directors.
• There is no maximum opportunity.
To provide appropriate levels of benefits to executives of the quality required and
appropriate skills to manage and develop the Company successfully.
• The Company may offer benefits for employees and Directors which may include
life assurance, travel insurance, income protection, subsidised gym membership
and private medical insurance (or associated cash plan which is subject to an annual
limit). Where appropriate some of these benefits are linked to base salary. Given
the international nature of the business relocation and expatriate benefits and
reimbursed business expenses (including any tax liability) incurred when travelling
overseas in performance of duties will be provided and this will be reviewed by the
Committee as the Company delivers its buy and build strategy.
• The maximum potential value is the cost of the provision of these benefits.
34
Afentra plc Pension
Purpose and link to strategy
To provide appropriate levels of pension provision to executives of the quality required
and appropriate skills to manage and develop the Company successfully.
Operation
•
10% of salary (delivered as a pension and/or a cash allowance).
Annual bonus
Purpose and link to strategy
To incentivise and reward the delivery of the Company’s short-term strategic objectives.
Operation
• Maximum opportunity is up to 100% of salary p.a.
• Annual targets are normally set at the start of the relevant financial year (or shortly
after a new executive joins the Board) based on financial, operational, strategic and/or
personal performance.
• Any bonus payment is subject to the Company’s malus and claw-back policy.
Long-term incentives
Purpose and link to strategy
Operation
To retain, incentivise and reward the delivery of the Company’s strategic objectives, and
to provide further alignment with shareholders.
The Company intends to introduce long-term incentive arrangements for executive
Directors and employees during 2021 which, subject to consultation with major
investors, will comprise:
1. a market standard employee share plan whereby:
• awards will normally be granted annually to executive Directors and employees;
• awards to executive Directors will only vest subject to continued service and
the achievement of stretching performance targets (whether share price based,
financial, operational or strategic);
• performance periods will normally be measured over a three-year period;
• malus and clawback provisions will apply.
2. a founder share plan whereby:
• participation will be limited to the founders (being those executive Directors who
have invested their own funds in the Company’s shares);
• participants will share in the growth delivered by the Company above a threshold
that the Directors believe represents a challenging hurdle;
• malus and clawback provisions will apply.
The precise terms of the plans are yet to be agreed although major shareholders will be
consulted in advance of the introduction of the plans.
35
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Shareholding guideline
Purpose and link to strategy
To align executive and shareholder interests.
Operation
• The Committee recognises the importance of executive Directors aligning their
interests with shareholders through building up significant shareholdings in the
Group. Executive Directors are expected to buy, and/or retain all shares acquired on
the vesting of share awards (net of tax) until they reach a 100% of salary ownership
guideline.
Non-executive Director fees
Purpose and link to strategy
Operation
To attract and retain a high-calibre Chairman and non-executive Directors by offering
appropriate fees.
• The Chairman and non-executive Directors will receive an annual fee (they will not be
eligible to participate in the Company’s pension arrangements, annual bonus plan or
receive share awards).
• Fees are normally reviewed annually taking into account the Directors’ role, time
commitment and comparator data where relevant.
• Each non-executive Director is entitled to be reimbursed travel and business
associated expenses (including any tax liability) incurred in the normal course of
business.
Service contracts and termination of employment
No Director currently has a notice period greater than 12 months and the service contract of the executive Director contains no
provision for pre-determined compensation on termination which exceeds 12 months’ salary and benefits.
Termination payments made to Directors on loss of office that are not provided for within their service contracts are only made if the
Committee considers them appropriate, has recommended them to the Board and the Board has given their approval.
A bonus payment will not normally be made to a Director under notice although there may be circumstances where a clear, specific and
determinable KPI has been achieved which justify a limited bonus payment.
36
Afentra plc Annual Report on Remuneration of Directors for the year ended 31 December 2020
During 2020 the Remuneration Committee comprised Leo Koot, Chairman and Ilya Belyaev.
The table below reports single figure remuneration of the Directors received in 2020 and the prior year.
2020 Remuneration
Executive Directors:
David Marshall 1
(resigned 4 December 2020)
Non-executive Directors:
Michael Kroupeev
(resigned 30 March 2021)
Leo Koot
(resigned 30 March 2021)
Ilya Belyaev
(resigned 30 March 2021)
Fees and
basic salary
Bonus
Defined
contribution
pension
Benefits
in kind
Single figure
remuneration
Total 2020
£
£
£
£
£
204,509
33,750
21,540
5,515
265,314
100,625
50,312
36,305
-
-
-
-
-
-
-
-
-
100,625
50,312
36,305
Aggregate remuneration 2020 (£)
Aggregate remuneration 2020 (US$)
391,751
502,907
33,750
43,326
21,540
27,652
5,515
7,080
452,556
580,965
2019 Remuneration
Executive Directors:
David Marshall 2
Non-executive Directors:
Michael Kroupeev
Leo Koot
Ilya Belyaev
Aggregate remuneration 2019 (£)
Aggregate remuneration 2019 (US$)
Fees and
basic salary
Bonus
Defined
contribution
pension
Benefits
in kind
Single figure
remuneration
Total 2019
£
£
£
£
£
214,135
26,026
21,413
4,572
266,146
102,800
51,400
37,008
405,343
517,439
-
-
-
-
-
-
26,026
33,223
21,413
27,335
-
-
-
4,572
5,837
102,800
51,400
37,008
457,354
583,834
1 Includes 2019 bonus amount of £34k accrued at 2019 year-end, which was paid on 26 March 2020.
2 Includes 2018 bonus amount of £26k accrued at 2018 year-end, which was paid on 26 February 2019.
37
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Director Remuneration in 2020
In respect of executive remuneration for 2020:
• David Marshall’s annual salary was £231,100 for 2020 (2019: £225,000) until his fixed term contract ended on 4 December
2020. He also received a 10% pension contribution and taxable benefits.
• Annual bonus potential was set at 100% of salary based on M&A led transformational growth initiatives and preservation of the
Group’s cash position. Following a review of the targets at the year end, the Committee determined that no annual bonus should
be payable in respect of the year ended 31 December 2020.
• The non-executive Directors’ fees for 2020 were: Michael Kroupeev £105,600 (2019: £102,800), Leo Koot £52,800 (2019:
£51,400) and Ilya Belyaev £38,100 (2019: £37,008).
• Although no employees were placed on furlough and no assistance was received from the UK Government during the year as
a result of the COVID-19 pandemic, the Directors agreed to a 25% reduction in their salary/fees (which was greater than the
reduction agreed by other employees) for the period from 27 April to 5 July 2020. The remuneration received by the Directors
during the year detailed in the table above therefore reflects this reduction in salary/fees.
Board Changes
In respect of the Board changes which took place during 2020 and in 2021 to date:
• David Marshall stepped down from the Board on 4 December 2020 at the end of his fixed term contract and Michael Kroupeev,
Leo Koot and Ilya Belyaev stepped down from the Board on 30 March 2021. No payments for loss of office were paid.
• Tony Hawkins was appointed as CEO on 1 January 2021 (he was appointed to the Board of Directors on 7 December 2020), on
an annual base salary of £225,000 for a 12 month term, a 10% of salary pension contribution and an agreement to grant share
options in the future, together with standard benefits. Other than being paid salary and benefits for his 3 month notice period, no
payments for loss of office were paid.
• Following the sale of ordinary shares owned by Waterford and its associates equal to 29.2% of the issued share capital, the
Relationship Agreement in place between the Company and Waterford setting out terms and conditions customary for a
substantial shareholder of this nature, automatically terminated.
• Paul McDade was appointed CEO and Ian Cloke was appointed COO on 16 March 2021. Anastasia Deulina was appointed CFO
on 5 May 2021. Details of their remuneration arrangements for 2021 are set out below.
• Jeffrey MacDonald was appointed as independent non-executive Chairman and Mr Gavin Wilson was appointed as non-
executive Director on 30 March 2021. Details of their fees from appointment are set out below.
38
Afentra plc Implementation of the new Remuneration Policy for 2021
Base salary
Paul McDade, Ian Cloke and Anastasia Deulina will receive base salaries for 2021, from their relevant
dates of appointment, of £350,000, £285,000 and £285,000 respectively.
Pension
10% of salary in line with the Remuneration Policy.
Annual bonus
Annual Bonus will be capped at 100% of base salary.
LTIP
The payment of the bonus will be dependent on the achievement of financial, operational, strategic and
personal performance targets and the targets and performance against these targets will be disclosed
in the Remuneration report for the year ending 31 December 2021 unless the Committee considers
these to be commercially sensitive.
As detailed in the Remuneration Policy, the Company intends to introduce two long-term incentive
arrangements to eligible executive Directors and employees during 2021 which, subject to consultation
with major investors, are expected to comprise a market standard employee share plan and a founder
share plan. The precise terms of the plans and the awards are yet to be agreed although major
shareholders will be consulted in advance of the introduction of the plans and the granting of awards.
Non-executive fees
The non-executive Chairman and non-executive Director will receive fees from appointment of
£96,000 and £45,000 respectively.
Statement of Directors interests (audited)
The Directors’ beneficial interests in the issued share capital of the Company are as follows:
Ordinary shares of 10p each
Executive Directors:
Paul McDade (appointed 16 March 2021)
Ian Cloke (appointed 16 March 2021)
Non-executive Directors:
Gavin Wilson (appointed 30 March 2021)
Jeffrey MacDonald (appointed 30 March 2021)
24 May 2021
31 December 2020
31 December 2019
2,267,000
1,733,000
2,681,666
-
-
-
-
-
-
-
-
-
Beneficial shareholdings include the shareholdings of a Director’s spouse and infant children.
Directors’ and Officers’ liability insurance
The Company has granted an indemnity to its Directors (including subsidiary undertakings) under which the Company will, to the maximum
extent possible by law, indemnify them against all costs, charges, losses and liabilities incurred by them in the performance of their duties.
The Company provides limited Directors’ and Officers’ liability insurance, at a cost of approximately $27.5k in 2020 (2019: $14.7k).
External directorships
None of the executive Directors receive fees in relation to directorships in other companies.
Gavin Wilson
Chairman of the Remuneration Committee
26 May 2021
39
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Extractive Industries Transparency Initiative (‘EITI’)
In accordance with the Transparency Criteria as set out by the EITI, the following payments to Government bodies have been made
during the year ended 31 December 2020:
Somaliland - Odewayne 1
1 Payments made by Genel Energy (SE(EA)L fully carried for its share of cost).
2020
$000
75
75
2019
$000
75
75
40
Afentra plc Directors’ Report
The Directors present their Annual Report and Financial Statements on the affairs of the Company and its subsidiaries, together
with the independent Auditors’ Report for the year ended 31 December 2020.
Principal activity and business review
The principal activity of the Group and Company throughout the year was the exploration of oil and gas with a primary geographic
focus on Africa and the Middle East, with an extension of the area for material opportunities. The future strategy and prospects for
the Group are reviewed in detail in the Chairman’s Statement, Chief Executive Officer’s Statement and the Strategic Report section
of this report.
The Group operates through subsidiary undertakings as appropriate to the fiscal environment. Subsidiary undertakings of the Group
are set out in Note 11 to the financial statements.
In 2020 the Group used a number of KPIs to assess the business performance against strategy, these included: M&A led
growth initiatives, managing the Group’s financial exposure to its existing assets and the continued reduction in the Group’s
administrative overhead.
Results and dividends
The Group loss for the financial year was $1.9 million (2019: loss $1.6 million). This leaves an accumulated Group retained earnings
of $35.9 million (2019: retained earnings of $37.8 million) to be carried forward. The Directors do not recommend the payment of a
dividend (2019: $nil).
Directors liabilities
Qualifying third-party indemnity provisions for the benefit of all of the Directors were in force throughout the financial year and they
remained in force as at the date of approval of the Annual Report as described in the Remuneration Committee report pages 33 – 39.
Going concern
The Group business activities, together with the factors likely to affect its future development, performance and position are set
out in the Operations review on page 12. The financial position of the Group and Company, its cash flows and liquidity position are
described in the Financial Review on pages 16 – 17. In addition, Note 18 to the financial statements includes the Group’s objectives,
policies and processes for managing its capital financial risk: details of its financial instruments and its exposures to credit risk and
liquidity risk.
The Group has sufficient cash resources for its working capital needs and its committed capital expenditure programme at least
for the next 12 months. As a consequence, the Directors believe that both the Group and Company are well placed to manage their
business risks successfully despite the ongoing pandemic and uncertain economic outlook.
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. This assessment has been made by the Directors who
remain confident the Group has sufficient cash resources at the date of signing the annual report to meet its liabilities as they fall due
for a period of at least 12 months from the date of signing these financial statements, and notwithstanding the impact that COVID-19
has had, and continues to have internationally. The Directors believe that the Group is in a strong position to absorb any potential
impact on the Group arising from COVID-19, and thus, they continue to adopt the going concern basis of accounting in preparation
of the financial statements.
41
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Directors’ Report (cont.)
Capital structure
Details of the issued share capital, together with details of the movements in the Company’s issued share capital during the year, are
shown in Note 14 to the financial statements. The Company has one class of ordinary share, which carries no right to fixed income.
Each share carries the right to one vote at general meetings of the Company.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of
the Company’s shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights
of control over the Company’s share capital and all issued shares are fully paid.
Directors
The Directors who served during the year were as follows:
Mr. Tony Hawkins
Mr. David Marshall
Mr. Michael Kroupeev
Mr. Leo Koot
Mr. Ilya Belyaev
Biographical details of the current serving Directors can be found in the Board of Directors section of this report on pages 26 – 27.
Directors and election rotation
With regard to the appointment and re-election of the Directors, the Company is governed by its Articles of Association, the
Companies Acts and related legislation. The powers of Directors are described within this report.
Significant shareholdings
Except for the holdings of ordinary shares listed below, the Company has not been notified by or become aware of any persons
holding 3% or more of the 220,053,520 issued ordinary shares of 10 pence each of the Company at 24 May 2021:
Zion SPC - Access Fund SP
Richard Griffiths and controlled undertakings
Denis O'Brien
Credit Suisse
Kite Lake Capital Management (UK) LLP
YF Finance
Hadron Capital LLP
Athos Capital Limited
42
Number
36,611,361
21,778,926
15,750,000
14,930,358
13,500,000
11,009,254
10,830,000
9,000,000
%
16.64
9.90
7.16
6.78
6.13
5.00
4.92
4.09
Afentra plc Business risk
A summary of the principle and general business risks can be found within the Strategic Report on pages 10 – 23.
Financial instruments
Information about the use of financial instruments, the Group’s policy and objectives for financial risk management is given in Note
18 to the financial statements.
Auditors
Each of the persons who are a Director at the date of approval of this Report and Financial Statements confirms that:
• so far as the Director is aware, there is no relevant audit information of which the Company’s Auditors are unaware; and
•
the Directors have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant
audit information and to establish that the Company’s Auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
BDO LLP has expressed its willingness to continue in office as Auditors and a resolution to appoint BDO will be proposed at the
forthcoming Annual General Meeting, which is to be confirmed.
Paul McDade
Chief Executive Officer
26 May 2021
43
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected
to prepare the Group and Company financial statements in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for
that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange
for companies trading securities on AIM.
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 they have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
44
Afentra plc Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial
statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of
the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Disclosure of audit information
In the case of each person who are Directors of the Company at the date when this report is approved:
• So far as they are individually aware, there is no relevant audit information of which the Company’s auditor is unaware; and
• Each of the Directors has taken all the steps that they ought to have taken as a Director to make themselves aware of any
relevant audit information and to establish that the Company’s auditor is aware of the information.
For and on behalf of the Board
Paul McDade
Chief Executive Officer
26 May 2021
45
Annual Report and Financial Statements 2020OverviewStrategic ReportGroup AccountsCorporate Governance 46
Afentra plc Group Accounts
Year ended 31 December 2020
47
Annual Report and Financial Statements 2020 Independent Auditors’ Report
to the members of Afentra plc
Opinion on the financial statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31 December 2020 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
the Parent Company financial statements have been properly prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of the
Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Afentra Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2020 which comprise the consolidated and the Parent Company statements of financial position, the consolidated
statement of comprehensive income, the consolidated and the Parent Company statement of changes in equity, the consolidated
and the Parent Company statement of cash flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international
accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the Parent Company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included:
• Obtaining and assessing the Group and Parent Company’s cash flow forecasts for the period to December 2022 and the underlying
assumptions.
• Comparing the level of capital and developmental expenditure committed by the Group and Parent Company to the level of such
expenditure included in the going concern model .
• Comparing the Group’s actual results for the year ended 31 December 2020 to the planned budgeted out turn for 2020 to assess the
quality of Management’s budgetary process and the Director’s assessment.
• Discussing and seeking views from Management and the Audit Committee on their assessment of risks and uncertainties.
• Reviewing and considering the adequacy of the disclosure within the financial statements relating to the Directors’ assessment of the
going concern basis of preparation.
48 Afentra plc
Overview
Strategic Report
Corporate Governance
Group Accounts
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the entity’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
Overview
Coverage
100% (2019: 100%) of Group total assets and loss before tax
Key audit matters
Carrying value of exploration assets
• 2020
• 2019
Materiality
Group financial statements as a whole
• $970k (2019: $1,000k) based on 1.5% (2019: 1.5%) of total assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
Our Group audit scope focused on the Group’s principal operating entities, Afentra plc and Sterling Northwest Africa Holdings
Limited. We have identified both entities as significant components for the purposes of our financial statement audit, based on their
relative share of total assets. Full scope audits were performed on these significant components.
The remaining components of the Group were considered non-significant and these components were principally subject to analytical
review procedures, together with additional substantive testing over the risk areas detailed above where applicable to that component.
All audit work (full scope audit or review work) was conducted by BDO LLP.
Annual Report and Financial Statements 2020
49
Independent Auditors’ Report (cont.)
to the members of Afentra plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit,
and directing the efforts of the engagement team. This matter was addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Carrying value of exploration assets (Note 9)
As at 31 December 2020, the carrying value of Odewayne was $21.2 million (2019: $21.1 million), as disclosed in Note 9 to the financial
statements. The Company holds a 34% interest in the Odewayne Block, fully carried by Genel Energy Somaliland Limited (‘Genel’)
for its share of the costs of all exploration activities during the Third and Fourth Periods of the production sharing agreement.
The Third Period has been extended to May 2023 and has a minimum work obligation of 500km of 2D seismic. The Fourth Period
has also been extended to 2 May 2024 and has a minimum work obligation of 1,000km of 2D seismic and one exploration well.
Management performed an impairment indicator review in accordance with accounting standards to assess whether there were any
indicators of impairment for the exploration assets and whether impairment was appropriate. Following this assessment, the Board
concluded that no impairment was required.
Given the inherent judgement involved in the assessment of the carrying value of the exploration assets, we considered the carrying
value of exploration assets to be a significant risk for our audit.
How the scope of our audit addressed the key audit matter
• We considered Management’s assessment of the indicators of impairment and we assessed if there is an ongoing expectation
that exploration in the licence areas will continue. We have also reviewed the licence agreement and the Production Sharing
Agreement. We have also reviewed the signed amendment which extends the periods out to 2023 and onwards.
• We made enquires at appropriate management levels of possible commitments and contingent liabilities.
• Contracts were reviewed to determine if the Group is being carried until the Fourth Period by Genel, and that Genel are
contractually committed to develop the prospect until then. Odewayne licence extension to 2023 was also considered as part
of our review.
• We have reviewed management reports, OCM, TCM minutes and public announcements to understand the future prospects
of the asset and the desire to further develop the asset.
• We reviewed the FY21 budgets and work programmes to consider the Group’s intention to continue to fund exploration
activity on this licence.
• We reviewed all provided correspondence between Genel and Sterling regarding whether the asset was in the third or fourth
period, the outcome was that the asset remains in the third period currently.
Key observations
Our procedures above did not indicate any instances which may suggest that management’s assessment of the carrying value of
the exploration assets, including the relative disclosures in the financial statements, to be inappropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
50 Afentra plc
Overview
Strategic Report
Corporate Governance
Group Accounts
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Group financial statements
Parent Company financial statements
2020
$’000
970
2019
$’000
1,000
2020
$’000
728
2019
$’000
750
Materiality
Basis for determining materiality
1.5% total assets
75% of Group
Rationale for the benchmark
applied
We consider total assets to be the most
significant determinant of the Group’s
financial performance on the basis that the
Group’s principal activity is the development
of oil and gas exploration assets and it is the
value of assets that is of greatest interest to
the users of the financial statements.
The rationale behind the materiality of the
Parent Company was the same as that of
the Group however in line with the auditing
standards we considered aggregation risk
within the Group and therefore capped the
materiality at 75% of the Group’s level.
Performance materiality
728
750
546
563
Basis for determining
performance materiality
Performance materiality was set at 75%
of the above materiality level based on
our assessment of a number of factors
including the expected total value of known
and likely misstatements (based on past
experience), our knowledge of the group’s
internal controls and management’s attitude
towards proposed adjustments.
Performance materiality was set at 75% of
the above materiality level as the level of
adjustments in the prior year was immaterial.
Component materiality
We set materiality for each component of the Group based on a percentage of 75% Group materiality dependent on the size and
our assessment of the risk of material misstatement of that component. Component materiality for the significant components was
$728k. In the audit of each component, we further applied performance materiality levels of 75% of the component materiality to
our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $19k (2019: $20k). We
also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Annual Report and Financial Statements 2020
51
Independent Auditors’ Report (cont.)
to the members of Afentra plc
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic report and the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report
or the Directors’ report.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
52 Afentra plc
Overview
Strategic Report
Corporate Governance
Group Accounts
In addition, our testing also included, but was not limited to:
• We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates,
and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. These
included but were not limited to compliance with Companies Act 2006 and international accounting standards.
• We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
• Testing the financial statement disclosures to supporting documentation, performing testing on account balances which were
considered to be a greater risk of susceptibility to fraud.
• We focused on laws and regulations that could give rise to a material misstatement in the financial statements. Our tests
included, but were not limited to:
– enquiries of management; and
– review of minutes of Board meetings throughout the period.
• Obtaining an understanding of the control environment in monitoring compliance with laws and regulations.
• Making enquiries of Management as to whether there was any correspondence from regulators in so far as the correspondence
related to the financial statements.
• Performing targeted journal entry testing based on identified characteristics the audit team considered could be indicative of
fraud, for example capitalisation entries to development assets.
These procedures are designed to address the risk of material misstatements in respect of irregularities, including fraud, but do not
provide absolute assurance as to the non-existence of any such misstatements.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations
in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Matt Crane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor,
55 Baker Street, Marylebone, London W1U 7EU
26 May 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Annual Report and Financial Statements 2020
53
Consolidated Statement of Comprehensive Income
Year ended 31 December 2020
Note
31 December 2020
$000
31 December 2019
$000
Other administrative expenses
Pre-licence costs
Total administrative expenses
Loss from operations
Finance income
Finance expense
Loss before tax
Tax
Loss for the year attributable to the owners of the parent
Other comprehensive income/(expense) - items to be
reclassified to the income statement in subsequent periods
Currency translation adjustments
Total other comprehensive income/(expense) for the year
Total comprehensive expense for the year attributable
to the owners of the parent
Basic and diluted loss per share (US cents)
4
6
6
7
8
(953)
(1,221)
(2,174)
(2,174)
326
(58)
(1,906)
-
(1,906)
7
7
(1,899)
(0.9)
(1,108)
(1,444)
(2,552)
(2,552)
1,068
(116)
(1,600)
-
(1,600)
(3)
(3)
(1,603)
(0.7)
54
Afentra plc Consolidated Statement of Financial Position
Year ended 31 December 2020
Note
31 December 2020
$000
31 December 2019
$000
Non-current assets
Intangible exploration and evaluation assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Currency translation reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Lease liability
Non-current liabilities
Lease liability
Long-term provision
Total liabilities
Total equity and liabilities
9
10
12
13
14/15
15
15
16
17
17
21,209
844
22,053
193
42,674
42,867
64,920
28,143
(197)
35,945
63,891
209
205
414
581
34
615
1,029
64,920
21,119
975
22,094
250
44,851
45,101
67,195
28,143
(204)
37,844
65,783
439
208
647
735
30
765
1,412
67,195
The financial statements of Afentra plc, registered number 1757721, were approved by the Board of Directors and authorised for
issue on 26 May 2021.
Signed on behalf of the Board of Directors
Paul McDade
Chief Executive Officer
26 May 2021
55
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Consolidated Statement of Changes in Equity
Year ended 31 December 2020
At 1 January 2019
Loss for the year
Currency translation adjustments
Total comprehensive expense for the year attributable to
the owners of the parent
At 31 December 2019
Adjustment to IFRS 9
At 1 January 2020
Loss for the year
Currency translation adjustments
Total comprehensive expense for the year attributable to
the owners of the parent
Share capital
$000
28,143
-
-
-
28,143
-
28,143
-
-
-
Currency
translation
reserve
$000
(201)
-
(3)
(3)
(204)
-
(204)
-
7
7
Retained
earnings
$000
39,444
(1,600)
-
(1,600)
Total
$000
67,386
(1,600)
(3)
(1,603)
37,844
65,783
7
37,851
(1,906)
-
(1,906)
7
65,790
(1,906)
7
(1,899)
At 31 December 2020
28,143
(197)
35,945
63,891
56
Afentra plc Consolidated Statement of Cash Flows
Year ended 31 December 2020
Note
Operating activities
Loss before tax
Depreciation, depletion & amortisation
10
Finance income and gains
Finance expense and losses
Operating cash flow prior to working capital movements
Decrease in trade and other receivables
Decrease in trade and other payables
Increase in provision
Net cash flow used in operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Exploration and evaluation costs
Net cash used in investing activities
Financing activities
Principal paid on lease liability
Interest paid on lease liability
6
10
9
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
13
2020
$000
(1,906)
193
(326)
59
(1,980)
57
(230)
4
(2,149)
326
(12)
(90)
224
(237)
(46)
(283)
(2,208)
44,851
31
42,674
2019
$000
(1,600)
191
(1,068)
55
(2,422)
140
(35)
30
(2,287)
1,068
-
(26)
1,042
(201)
(54)
(255)
(1,500)
46,312
39
44,851
57
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Company Statement of Financial Position
Year ended 31 December 2020
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Retained earnings
Total equity
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Note
31 December 2020
$000
31 December 2019
$000
11
12
13
14/15
15
16
20,140
20,140
22,637
42,672
65,309
85,449
28,143
24,385
52,528
32,921
32,921
32,921
85,449
20,140
20,140
21,060
44,849
65,909
86,049
28,143
24,951
53,094
32,955
32,955
32,955
86,049
The loss for the financial year within the Company accounts of Afentra plc was $566k (2019: $171k profit). As provided by s408 of the
Companies Act 2006, no individual statement of comprehensive income and expense is provided in respect of the Company.
The financial statements of Afentra plc, registered number 1757721, were approved by the Board of Directors and authorised for
issue on 26 May 2021.
Signed on behalf of the Board of Directors
Paul McDade
Chief Executive Officer
26 May 2021
58
Afentra plc
Company Statement of Changes in Equity
Year ended 31 December 2020
At 1 January 2019
Total comprehensive income for the year
At 31 December 2019
Total comprehensive expense for the year
At 31 December 2020
Share capital
$000
28,143
-
28,143
-
Retained
earnings
$000
24,780
171
24,951
(566)
Total
$000
52,923
171
53,094
(566)
28,143
24,385
52,528
59
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Company Statement of Cash Flows
Year ended 31 December 2020
Operating activities
(Loss)/profit before tax
Finance income and gains
Operating cash flow prior to working capital movements
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Net cash flow used in operating activities
Investing activities
Interest received
Net cash generated from investing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Note
6
13
2020
$000
(566)
(326)
(892)
(1,577)
(34)
(2,503)
326
326
(2,177)
44,849
-
42,672
2019
$000
171
(1,068)
(897)
(1,646)
14
(2,529)
1,068
1,068
(1,461)
46,310
-
44,849
60
Afentra plc Notes to the Financial Statements
Year ended 31 December 2020
1. ACCOUNTING POLICIES
a) General information
Afentra plc is a public company limited by shares, incorporated in the United Kingdom under the UK Companies Act 2006. The
address of the registered office is High Holborn House, 52-54 High Holborn, London WC1V 6RL. The Company and the Group are
engaged in the exploration, development and production of commercial oil and gas.
These financial statements are presented in US dollars as this is the currency in which the majority of the Group’s Cash and cash
equivalents, revenues and expenditure are transacted. The functional currency of the Company is US dollars.
b) Basis of accounting and adoption of new and revised standards
The Group and Company financial statements have been prepared in accordance with IFRSs except that the Company financial
statements do not include a Statement of Comprehensive Income as permitted by s408 of the Companies Act 2006. They have
also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
(i) New and amended standards adopted by the Group:
No standards adopted this year had a material effect.
(ii) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these
financial statements which have not been adopted early:
Standard
IFRS 3
IAS 16 and IAS 37
IFRS 1
IFRS 9
Illustrative Examples
accompanying IFRS 16
IAS 41
IAS 1
Description
Amendments - Business Combination
Amendments – Property, Plant and Equipment and
Provisions, Contingent Liabilities and Contingent Assets
Effective date
1 January 2022
1 January 2022
Annual Improvements to IFRSs (2018-2020 Cycle)
1 January 2022
EU status
TBC
TBC
TBC
Amendments - Classification of Liabilities as Current or
Non-current
1 January 2023
TBC
c) Going concern
The Directors have, at the time of approving the financial statements, 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 preparation of the financial statements. Further detail is contained in the Directors’ Report.
61
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
d) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is recognised where an investor is exposed, or has rights, to
variable returns from its investment with the investee and has the ability to affect these returns through its power over the investee.
The results of subsidiaries acquired, or disposed of, during the year are included in the Statement of Comprehensive Income from
the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line
with those used by the Group.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
A separate Statement of Comprehensive Income and expense for the Parent Company has not been published in accordance with
section 408 of the Companies Act 2006.
e) Joint arrangements
The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant
activities of the arrangement to the Group and at least one other party. Joint control is assessed under the same principles as
control over subsidiaries. The Group classifies its interest in joint arrangements as joint operations as the Group has both the rights
to assets and obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers:
•
the structure of the joint arrangement;
•
the contractual terms of the joint arrangement; and
• any other facts and circumstances.
The Group accounts for its interests in joint operations by recognising its share of assets, liabilities, revenues and expenses in
accordance with its contractually conferred rights and obligations.
The Odewayne PSA is classified as a joint arrangement within the Group (see Note 9).
62
Afentra plc f) Oil and gas interests
Exploration and evaluation (‘E&E’) assets
Capitalisation
Pre-acquisition costs on oil and gas assets are recognised in the profit or loss when incurred. Costs incurred after rights to explore
have been obtained, such as geological and geophysical surveys, drilling and commercial appraisal costs, and other directly
attributable costs of exploration and appraisal including technical and administrative costs, are capitalised as intangible E&E assets.
The assessment of what constitutes an individual E&E asset is based on technical criteria but essentially either a single licence
area or contiguous licence areas with consistent geological features are designated as individual E&E assets. Costs relating to the
exploration and evaluation of oil and gas interests are carried forward until the existence, or otherwise, of commercial reserves have
been determined.
E&E costs are not amortised prior to the conclusion of appraisal activities. Once active exploration is completed the asset is
assessed for impairment. If commercial reserves are discovered then the carrying value of the E&E asset is reclassified as a
development and production (‘D&P’) asset, following development sanction, but only after the carrying value is assessed for
impairment and where appropriate its carrying value adjusted. If it subsequently assessed that commercial reserves have not been
discovered, the E&E asset is written off to the profit or loss.
Impairment
In accordance with IFRS 6 E&E assets are reviewed for impairment when circumstances arise which indicate that the carrying value
of an E&E asset exceeds the recoverable amount. The recoverable amount of the individual asset is determined as the higher of
its fair value less costs to sell and value in use. Impairment losses resulting from an impairment review are recognised in the profit
or loss within the Statement of Comprehensive Income. Any impairment loss is separately recognised within the Statement of
Comprehensive Income.
Impaired assets are reviewed annually to determine whether any substantial change to their fair value amounts previously impaired
would require reversal.
As previously recognised, impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates
used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined
(net of depletion or amortisation) had no impairment loss been recognised in prior periods. Reversal of impairments and impairment
charges are credited/ (charged) under total administration expenses within the Statement of Comprehensive Income.
Refer to Note 2 for detailed disclosure of the results of impairments and impairment reviews performed.
g) Property, plant and equipment assets other than oil and gas assets
Property, plant and equipment other than oil and gas assets are stated at cost, less accumulated depreciation, and any provision
for impairment. Depreciation is provided at rates estimated to write off the cost, less estimated residual value, of each asset over its
expected useful life as follows:
• Office lease, straight-line over the lease term
• Computer and office equipment depreciation, 33% straight-line
63
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
h) Foreign currencies
The US dollar is the functional and reporting currency of the Company and the reporting currency of the Group. Transactions
denominated in other currencies are translated into US dollars at the rate of exchange ruling at the date of the transaction. Assets
and liabilities in other currencies are translated into US dollars at the rate of exchange ruling at the reporting date. All exchange
differences arising from such translations are dealt with in current year profit and loss.
The results of entities with a functional currency other than the US dollar are translated at the average rates of exchange during the
period and their statement of financial position at the rates ruling at the reporting date. Exchange differences arising on translation of
the opening net assets and on translation of the results of such entities are dealt with through the currency translation reserve.
i) Taxation
Current tax
Tax is payable based upon taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of
Comprehensive Income because it excludes items of income or expense that are taxable or deductible on other years and it further
excludes items that are never taxable or deductible. Any Group liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in JV’s, except where the Group is able to control the reversal of the temporary differences and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised.
Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
j) Investments (Company)
Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance sheet. Investments
in subsidiaries are assessed for impairment in line with the requirements of IAS 36 and where evidence of non-recoverability is
identified an appropriate impairment is accounted for in the profit or loss.
64
Afentra plc k) Leases
In accordance with IFRS 16, at the lease commencement date, the Group recognises a right-of-use asset and a lease liability on the
balance sheet. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement
date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.
l) Financial instruments
There are no other categories of financial instrument other than those listed below:
Trade receivables and amounts due from subsidiaries
Trade receivables are recognised and carried at the original invoice amount less any provision for impairment. Other receivables and
amounts due from subsidiaries are recognised and measured at nominal value less any provision for impairment.
The Group and Company applies the expected credit loss model in respect of trade receivables and amounts due from subsidiaries.
The Group and Company track changes in credit risk and recognise a loss allowance based on lifetime ECLs at each reporting date.
Cash and cash equivalents
Cash and cash equivalents comprise demand deposits, and other short-term investments, with an original maturity of 3 month, are
readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
The Group has the following financial liabilities; all are classified as held at amortised cost. The Group holds no other categories of
financial liability.
Trade payables
Trade payables are stated at their amortised cost.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the asset of the Group after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
m) Pension costs
The Group operates a number of defined contribution pension schemes. The amount charged to the Statement of Comprehensive
Income for these schemes is the contributions payable in the year. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or prepayments in the Statement of Financial Position.
n) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers.
The chief operating decision makers have been identified as the Board of Directors.
The operating results of each geographical segment are regularly reviewed by the Group’s chief operating decision makers in order to
make decisions about the allocation of resources and to assess their performance. Africa has exploration activities and the United
Kingdom office is an administrative cost centre.
65
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
In the application of the Group’s accounting policies, which are described in Note 1, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
Judgements
Company – Investment
If circumstances indicate that impairment may exist, investments in subsidiary undertakings of the Company are evaluated using
market values, where available, or the discounted expected future cash flows of the investment. If these cash flows are lower than the
Company’s carrying value of the investment, an impairment charge is recorded in the Company. Where impairments have been booked
against the underlying exploration assets, the investments in subsidiaries have been written down to reflect their recoverable value.
Evaluation of impairments on such investments involves significant management judgement and may differ from actual results.
A full impairment review has not been performed in 2020 and thus no impairments were recognised during the year, by the Company.
As at 31 December 2020, Company investments in subsidiaries totalled $20.1 million (see Note 11), being underpinned by the
Odewayne exploration block in Somaliland. After reviewing the feasibility of the asset detailed in the Operations review on page 12,
management did not note any impairment indicators that would result in a full impairment review to be undertaken.
Impairment of assets
Management is required to assess oil and gas assets for indicators of impairment and has considered the economic value of
individual E&E assets. E&E assets are subject to a separate review for indicators of impairment, by reference to the impairment
indicators set out in IFRS 6, which is inherently judgmental.
After reviewing the feasibility of the asset detailed in the Operations review on page 12 and considering the key factors including;
the extension to the current period and further exploration work streams, management did not note any impairment indicators that
would result in a full impairment review to be undertaken.
The Directors judgement was that a full impairment review wasn’t required and thus no impairments were recognised during the year,
by the Group.
Estimates
Company – expected credit loss model prescribed by IFRS 9
IFRS 9 requires the Parent Company to make assumptions when implementing the forward-looking expected credit loss model. This
model is required to be used to assess the intercompany loan receivables from Sterling Energy (UK) Limited and Sterling Energy
(East Africa) Limited for impairment.
66
Afentra plc Arriving at the expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan
receivables, the possible credit losses that could arise and the probabilities for these scenarios. The following was considered; the
exploration project risk, country risk, the expected future oil prices, the value of the potential reserves, the ability to sell the project,
and the ability to find a new farm-out partner.
The credit loss allowance was assessed at 31 December 2020. Credit loss allowances for amounts owed from subsidiary
undertakings increased by $100k during the period.
Discount rates – IFRS 16 leases
The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group’s incremental
borrowing rate as at 31 December 2020. The Group’s incremental borrowing rate is the rate at which a similar borrowing could be
obtained from an independent creditor on the basis of external figures derived from the market.
3. OPERATING SEGMENTS
Africa operations in 2020 focused on exploration and appraisal activities in Somaliland. The UK corporate office is a technical and
administrative cost centre focused on new ventures. The operating results of each segment are regularly reviewed by the Board of
Directors in order to make decisions about the allocation of resources and to assess their performance.
The accounting policies of these segments are in line with those set out in Note 1.
The following tables present income, expense and certain asset and liability information regarding the Group’s operating segments
for the year ended 31 December 2020 and for the year ended 31 December 2019.
Corporate
Africa
Total
Other administrative expenses
Pre-licence costs
Loss from operations
Finance income
Finance expense
Note
6
6
2020
$000
(953)
(1,221)
(2,174)
326
(58)
2019
$000
(1,108)
(1,444)
(2,552)
1,068
(116)
Segment loss before tax
(1,906)
(1,600)
2020
$000
2019
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2020
$000
(953)
(1,221)
(2,174)
326
(58)
2019
$000
(1,108)
(1,444)
(2,552)
1,068
(116)
(1,906)
(1,600)
193
191
Other segment information
Depreciation
Segment assets and liabilities
Non-current assets 1
Segment assets 2
Segment liabilities 3
193
191
844
975
21,209
21,119
22,053
22,094
42,867
(1,016)
45,101
(1,396)
-
(13)
-
(16)
42,867
(1,029)
45,101
(1,412)
1 Segment non-current assets of $21.2 million in Somaliland (2019: $21.1 million).
2 Corporate segment assets include $42.7 million cash and cash equivalents (2019: $44.9 million). Carrying amounts of segment assets exclude investments in subsidiaries.
3 Carrying amounts of segment liabilities exclude intra-group financing.
67
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts
Notes to the Financial Statements (cont.)
Year ended 31 December 2020
4. LOSS FROM OPERATIONS
Loss from operations is stated after charging:
Staff costs
Depreciation of Property, plant and equipment
An analysis of auditor’s remuneration is as follows:
Fees payable to the Group's auditors for the audit
of the Group's annual accounts
Audit of the Company's subsidiaries pursuant to legislation
Total audit fees
Note
5
10
2020
$000
1,471
193
32
5
37
2019
$000
1,648
191
47
5
52
5. EMPLOYEE INFORMATION
The average monthly number of employees of the Group and Company was as follows:
Africa
Corporate
Non-executive
Group and Company employee costs during the year amounted to:
Wages and salaries
Social security costs
Other pension costs
Group
Company
2020
2019
2020
2019
-
7
3
10
-
7
3
10
-
-
3
3
Group
Company
2020
$000
1,218
153
100
1,471
2019
$000
1,379
172
97
1,648
2020
$000
242
29
-
271
-
-
3
3
2019
$000
245
29
-
274
Key management personnel include Directors who have been paid $581k (2019: $584k). See Remuneration Committee Report
(pages 33 – 39) and Note 19 for additional detail.
A portion of the Group’s staff costs and associated overheads are expensed as pre-licence expenditure ($1.2 million) or capitalised
($74k). In 2020 this amounted to $1.3 million (2019: $1.4 million).
68
Afentra plc 6. FINANCE INCOME AND FINANCE EXPENSE
Finance income:
Interest revenue on short-term deposits
Finance expense:
Bank charges
Interest expense for leasing arrangement
Exchange differences
7. TAXATION
The tax charge for the year is calculated by applying the applicable standard rate of tax as follows:
Loss before tax
Tax on loss on ordinary activities at standard UK corporation tax rate of 19% (2019: 19%)
Effects of:
Deferred tax movement on provision not provided
Expenses not deductible for tax purposes
Capital allowances in excess of depreciation
Adjustment for tax losses
Tax charge for the year
2020
$000
326
326
13
46
(1)
58
2020
$000
(1,906)
(362)
(4)
78
(216)
504
-
2019
$000
1,068
1,068
61
54
1
116
2019
$000
(1,600)
(304)
3
58
(271)
514
-
Deferred tax
At the reporting date the Group had an unrecognised deferred tax asset of $22.1 million (2019: $19.5 million) relating primarily to
unused tax losses and unutilised capital allowances. No deferred tax asset has been recognised due to the uncertainty of future
profit streams against which these losses could be utilised. At the reporting date the Company had an unrecognised deferred tax
asset of $16.7 million (2019: $14.8 million) relating primarily to unused losses and unutilised capital allowances.
69
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
8. LOSS PER SHARE (BASIC AND DILUTED)
Loss for the year
2020
$000
(1,906)
2019
$000
(1,600)
Weighted average number of ordinary shares in issue during the year
220,053,520
220,053,520
Dilutive effect of share options outstanding
Fully diluted average number of ordinary shares during the year
EPS (US cents)
-
-
220,053,520
220,053,520
(0.9)
(0.7)
9. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
Net book value at 1 January 2019
Additions during the year
Net book value at 31 December 2019
Additions during the year
Net book value at 31 December 2020
Group intangible assets at the year end 2020:
Odewayne PSA, Somaliland: SE(EA)L 34%, Genel Energy Somaliland Limited 50%, Petrosoma 16%.
Classified as a joint arrangement in accordance with IFRS 11.
Group
$000
21,093
26
21,119
90
21,209
70
Afentra plc 10. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2019
Adoption of IFRS 16
Modification during the year
At 31 December 2019
Modification during the year
Additions during the year
At 31 December 2020
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Net book value at 31 December 2020
Net book value at 31 December 2019
Net book value at 31 December 2018
Office Lease
Computer
and office
equipment
$000
$000
-
1,135
23
1,158
28
22
1,208
-
(187)
(187)
(190)
(377)
831
971
-
140
-
-
140
-
12
152
(132)
(4)
(136)
(3)
(139)
13
4
8
Total
$000
140
1,135
23
1,298
28
34
1,360
(132)
(191)
(323)
(193)
(516)
844
975
8
The right of use asset (office lease) is depreciated on a straight-line basis over the lifetime of the lease contract. The current lease
term is for 8 years, ending in 2024.
See Note 1 for details (Leases) and Note 17 (Lease liability).
71
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
11. INVESTMENT IN SUBSIDIARIES
Cost
At 1 January 2019
At 31 December 2019
At 31 December 2020
Company
$000
20,140
20,140
20,140
See Note 2 (Company – Investment) for details on the impairment assessment methodology.
The subsidiary undertakings at 31 December 2020 are as follows (included on consolidation):
Country of
incorporation
Class of
shares held
Type of
ownership
Proportion of
voting rights
held 2020
Proportion of
voting rights
held 2019
Nature of
business
Sterling Energy (UK)
Limited
Afentra Overseas
Limited
Sterling Northwest
Africa Holdings Limited
Sterling Energy
Holdings Limited 1
Sterling Energy (East
Africa) Limited 2
United
Kingdom 3
United
Kingdom 3
Ordinary
Direct
Ordinary
Direct
Jersey, CI 4
Ordinary
Direct
Jersey, CI 4
Ordinary
Indirect
Jersey, CI 4
Ordinary
Indirect
100%
100%
100%
100%
100%
100%
Exploration for oil
and gas
100% Investment holding
company
100%
Exploration for oil
and gas
100% Investment holding
company
100%
Exploration for oil
and gas
1 Held directly by Sterling Northwest Africa Holdings Limited
2 Held directly by Sterling Energy Holdings Limited
3 Registered address - 52-54 High Holborn, London, WC1V 6RL
4 Registered address - 12 Castle Street, St Helier, Jersey, JE2 3RT
72
Afentra plc 12. TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts owed from subsidiary undertakings
Other receivables
Prepayments and accrued income
Group
Company
2020
$000
87
-
37
69
193
2019
$000
166
-
27
57
250
2020
$000
3
22,600
10
24
2019
$000
65
20,978
8
9
22,637
21,060
Trade and other receivables, not credit impaired, consist of current receivables that the Group views as recoverable in the short term.
Credit loss allowances for amounts owed from subsidiary undertakings amount to $9.1 million.
The Directors consider that the carrying amount of trade and other receivables is a reliable estimate of their fair value.
Transactions between subsidiaries are non-interest bearing and repayable on demand.
See Note 1 for details (Financial instruments - Trade receivables).
13. CASH IN BANK AND SHORT-TERM DEPOSITS
Group
Company
Cash at bank available on demand
Short-term deposits
Cash on hand
2020
$000
19,064
23,608
2
42,674
2019
$000
1,103
43,746
2
44,851
Group and Company
Term
Interest
rate %
Development Bank of Singapore (DBS)
3 months
0.20 - 0.22
Julius Baer
2020
$000
19,064
23,608
-
42,672
2020
$000
23,608
-
23,608
2019
$000
1,103
43,746
-
44,849
2019
$000
23,500
20,246
43,746
At 31 December 2020, all short-term deposits mature within 90 days and can be withdrawn without restriction.
73
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
14. SHARE CAPITAL
Authorised, called up, allotted and fully paid
220,053,520 ordinary shares of 10p (2019: 220,053,520 ordinary shares of 10p)
28,143
28,143
2020
$000
2019
$000
15. RESERVES
Reserves within equity are as follows:
Share capital
Amounts subscribed for share capital at nominal value.
Currency translation reserve
The foreign currency translation reserve includes movements that relate to the retranslation of the subsidiaries whose functional
currencies are not designated in US dollars.
Retained earnings
Cumulative net gains and losses recognised in the Statement of Comprehensive Income less any amounts reflected directly in other
reserves. The share option reserve has been included within the retained deficit and is a non-distributable reserve.
16. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Amounts owed to subsidiary undertakings
Accruals
Group
Company
2020
$000
2019
$000
113
-
96
209
108
-
331
439
2020
$000
42
32,800
79
32,921
2019
$000
33
32,811
111
32,955
The Directors consider that the carrying amount of trade and other payables is a reliable estimate of their fair value. Transactions
between subsidiaries are non-interest bearing and repayable on demand.
74
Afentra plc 17. LEASES
IFRS 16 was adopted 1 January 2019 without restatement of comparative figures. For further details see Note 1 (Leases).
The Group has a lease for the head office and classifies it as a right-of-use asset in a consistent manner to its property, plant and
equipment (see Note 10).
On adoption of IFRS 16, the Company recognised lease liabilities in relation to the head office which had previously been classified
as ‘operating leases’ under IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1 January 2020. The incremental borrowing rate applied to the lease liabilities on
1 January 2020 was 5%.
Lease liabilities are presented in the statement of financial position as follows:
Current
Non-current
2020
$000
205
581
786
2019
$000
208
735
943
Extension options are included in the lease liability when it, based on the management’s judgement, is reasonably certain that an
extension will be exercised. As at 31 December 2020, the contractual maturities of the Company’s lease liabilities are as follows:
Within one
year
Between one
to two years
$000
$000
Over two
years
$000
Total
Interest
$000
$000
Carrying
amount
$000
Group
Lease liability
237
237
408
882
(96)
786
75
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
18. FINANCIAL INSTRUMENTS
Capital risk management and liquidity risk
The Group and Company is not subject to externally imposed capital requirements. The capital structure of the Group and
Company consists of cash and cash equivalents held for working capital purposes and equity attributable to the equity holders of
the parent, comprising issued capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. The Group
and Company uses cash flow models and budgets, which are regularly updated, to monitor liquidity risk.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each material class of financial asset, financial liability
and equity instrument are disclosed in Note 1 to the financial statements. Due to the short-term nature of these assets and liabilities
such values approximate their fair values at 31 December 2020 and 31 December 2019.
Group
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Total
Financial liabilities at amortised cost
Trade and other payables
Total
Company
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Total
Financial liabilities at amortised cost
Trade and other payables
Total
Carrying amount/Fair value
2020
$000
42,674
123
42,797
209
209
2019
$000
44,851
193
45,044
439
439
Carrying amount/Fair value
2020
$000
42,672
22,613
65,285
32,921
32,921
2019
$000
44,849
21,051
65,900
32,955
32,955
Financial risk management objectives
The Group’s and Company’s objective and policy is to use financial instruments to manage the risk profile of its underlying
operations. The Group continually monitors financial risk including oil and gas price risk, interest rate risk, equity price risk, currency
translation risk and liquidity risk and takes appropriate measures to ensure such risks are managed in a controlled manner including,
where appropriate, through the use of financial derivatives. The Group and Company does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
76
Afentra plc Interest rate risk management
The Group and Company does not have any outstanding borrowings and thus, the Group and Company is only exposed to interest
rate risk on its short-term cash deposits.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date and assumes the
amount of the balances at the reporting date were outstanding for the whole year.
A 100 basis point change represents management’s estimate of a possible change in interest rates at the reporting date. If interest
rates had been 100 basis points higher/lower and all other variables were held constant the Group’s profits and equity would be
impacted as follows:
Cash and cash equivalents
Increase
Decrease
2020
$000
427
2019
$000
449
2020
$000
(427)
2019
$000
(449)
Foreign currency risk
The Company’s functional currency is the US dollar, being the currency in which the majority of the Group’s revenue and expenditure
is transacted. Small elements of its management, services and treasury functions are held and transacted in pounds sterling. Such
elements transacted in pounds sterling have been exchanged at; the average rate of $1.2837/£1.00 (2019: 1.2765/£1.00) or the year
end spot rate of $1.3649/£1.00 (2019: $1.321/£1.00), depending on its nature and timing. The Group does not enter into derivative
transactions to manage its foreign currency. Foreign currency risk is immaterial to the Group and Company – see the following table:
Financial assets
Cash and cash equivalents
Cash and cash equivalents held in US$
Cash and cash equivalents held in GBP
Trade and other receivables
Trade and other receivables held in US$
Trade and other receivables held in GBP
Group
Company
2020
$000
42,565
109
42,674
2019
$000
44,630
221
44,851
2020
$000
42,564
108
42,672
Group
Company
2020
$000
3
120
123
2019
$000
65
128
193
2020
$000
11,589
11,024
22,613
2019
$000
44,629
220
44,849
2019
$000
11,738
9,313
21,051
77
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
Financial liabilities
Trade and other payables
Trade and other payables held in US$
Trade and other payables held in GBP
Group
Company
2020
$000
8
201
209
2019
$000
8
431
439
2020
$000
25,576
5,345
32,921
2019
$000
27,587
5,368
32,955
Credit risk management
The Group has to manage its currency exposures and the credit risk associated with the credit quality of the financial institutions
in which the Group maintains its cash resources. At the year end the Group held approximately 99.7% (2019: 99.5%) of its cash in
US dollars. At the year end the Group held the majority of its balances with AA-/A Standard & Poor’s or equivalent rated institutions.
The Group continues to proactively monitor its treasury management to ensure an appropriate balance of the safety of funds and
maximisation of yield.
Trade and other receivables are non-interest bearing. The Group does not hold any collateral as security and the Group does not
hold any significant allowance in the impairment account for trade and other receivables as they relate to customers with no default
history. There are no financial instruments held at fair value under the level 1, 2 and 3 hierarchy.
The Company is exposed to credit risk through amounts due from its subsidiary undertakings. Refer to Note 1 for details on the
credit loss allowance made.
Liquidity and interest rate tables
The following tables detail the remaining contractual maturity for the non-derivative financial assets and liabilities of the Group and
Company. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the Group can be required to pay. The table includes both interest and principal cash flows including rates for loan liabilities
and cash deposits on actual contractual arrangements. The weighted average interest rate used in 2020 is nil % (2019: nil %).
Less than
six months
Six
months
to one year
One to
six years
Total
Interest
Principal
$000
$000
$000
$000
$000
$000
Group
Trade and other payables (2020)
Trade and other payables (2019)
76
63
-
-
Company
Trade and other payables (2020)
Trade and other payables (2019)
33
25
32,800
32,811
-
-
-
-
76
63
32,832
32,836
-
-
-
-
-
-
-
-
78
Afentra plc
19. RELATED PARTY TRANSACTIONS
Details of Directors’ remuneration, which comprise key management personnel, are provided below:
Short-term employee benefits
Social security costs
Defined contribution pension
Group
Company
2020
$000
512
64
28
604
2019
$000
567
71
27
665
2020
$000
242
29
-
271
2019
$000
245
29
-
274
Further information on Directors’ remuneration is detailed in the Remuneration Committee Report, on pages 33– 39.
The Company’s subsidiaries are listed in Note 11. The following table provides the balances which are outstanding with subsidiary
undertakings at the balance sheet date:
Amounts owed from subsidiary undertakings
Amounts owed to subsidiary undertakings
The Group and Company has no other disclosed related party transactions.
2020
$000
22,600
(32,800)
(10,200)
2019
$000
20,978
(32,811)
(11,833)
79
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2020
20. Subsequent events
Changes in major shareholdings and Board appointments
On the 18 February 2021 the Company announced that a number of institutional and high net worth investors had agreed to
purchase the following shares:
• Waterford Finance and Investment Limited - 64,315,517 ordinary shares in the Company (equating to its entire 29.23%
shareholding in the Company); and
• Mistyvale Limited - 34,467,790 ordinary shares in the Company (equating to its entire 15.66% shareholding in the Company).
The Company and Waterford were parties to a Relationship Agreement dated 10 June 2016. Following the sale of Waterford’s
ordinary shares in the Company as set out above, the Relationship Agreement automatically terminated.
On the 16 March 2021 the Company announced that Paul McDade had joined as the Company’s Chief Executive Officer with Ian
Cloke joining as Chief Operating Officer. The Company’s existing CEO, Mr. Tony Hawkins, stepped down from the Board.
On the 30 March 2021 the Company announced the appointments of Jeffrey MacDonald as Independent non-executive Chairman
and Gavin Wilson as Independent non-executive Director. These appointments replaced the non-executive Chairman (Michael
Kroupeev) and non-executive Directors (Leo Koot and Ilya Belyaev).
Company Name Change Adoption of New Articles of Association
On the 13 April 2021 the Company announced its intention to change its name to Afentra plc and adopt new articles of association.
The proposed change of name and new articles were approved at a General Meeting held on 30 April 2021.
On the 5 May 2021 Afentra plc is launched and the Company announced the appointment of Anastasia Deulina as Chief Financial
Officer.
80
Afentra plc Definitions and Glossary of Terms
$
US dollars
Companies Act or Companies Act 2006 The Companies Act 2006, as amended
2D
AIM
AGM
Articles
Board
Company
Directors
E&E
E&P
EBITDAX (Adjusted)
EITI
Farm-in & farm-out
FCA
G&A
G&G
GBP
Genel Energy
Group
HSSE
Hydrocarbons
IAS
IFRS
IOCs
JV
k
km
km2
KPIs
Two dimensional
AIM, a SME Growth market of the London Stock Exchange
Annual General Meeting
The Articles of Association of the Company
The Board of Directors of the Company
Afentra plc
The Directors of the Company
Exploration and evaluation assets
Exploration and production
Earnings before interest, taxation, depreciation, depletion and amortisation,
impairment, share-based payments, provisions and pre-licence expenditure.
Extractive Industries Transparency Initiative
A transaction under which one party (farm-out party) transfers part of its interest to a
contract to another party (farm-in party) in exchange for a consideration which may
comprise the obligation to pay for some of the farm-out party costs relating to the
contract and a cash sum for past costs incurred by the farm-out party.
Financial Conduct Authority of the United Kingdom
General and administrative
Geological and geophysical
Pounds sterling
Genel Energy Somaliland Limited
The Company and its subsidiary undertakings
Health, Safety, Security and Environment
Organic compounds of carbon and hydrogen
International Accounting Standards
International Financial Reporting Standards
International oil company
Joint venture
Thousands
Kilometre(s)
Square kilometre(s)
Key performance indicators
81
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts
Definitions and Glossary of Terms (cont.)
Lead
Indication of a potential exploration prospect
London Stock Exchange or LSE
London Stock Exchange Plc
LTIP
M&A
m
OECD
Long-term incentive plan
Mergers and acquisitions
Metre(s)
Organisation for Economic Cooperation and Development
Ordinary Shares
Ordinary shares of 10 pence each
Petroleum
Petrosoma
Prospect
PSA
QCA Code
Reserves
Seismic
Shares
Shareholders
Subsidiary
Oil, gas, condensate and natural gas liquids
Petrosoma Limited (JV partner in Somaliland)
An area of exploration in which hydrocarbons have been predicted to exist in
economic quantity. A group of prospects of a similar nature constitutes a play.
Production sharing agreement
Corporate Governance Code for Small and Mid-Size Quoted Companies 2018
Reserves are those quantities of petroleum anticipated to be commercially
recoverable by application of development projects to known accumulations from
a given date forward under defined conditions. Reserves must satisfy four criteria;
they must be discovered, recoverable, commercial and remaining based on the
development projects applied. Reserves are further categorised in accordance with
the level of certainty associated with the estimates and may be sub-classified based
on project maturity and/or characterised by development and production status.
Data, obtained using a sound source and receiver, that is processed to provide a
representation of a vertical cross-section through the subsurface layers.
10p ordinary shares
Ordinary shareholders of 10p each in the Company
A subsidiary undertaking as defined in the 2006 Act
United Kingdom or UK
The United Kingdom of Great Britain and Northern Ireland
Waterford
Working Interest or WI
Waterford Finance and Investment Limited
A Company’s equity interest in a project before reduction for royalties or production
share owed to others under the applicable fiscal terms.
82
Afentra plc
Professional Advisors
Nominated Advisor and
Joint Corporate Broker
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Joint Corporate Broker
Tennyson Securities
65 Petty France
London
SW1H 9EU
Financial PR
Buchanan
107 Cheapside
London
EC2V 6DN
Corporate Bankers
The Royal Bank of Scotland Plc
1 Albyn Place
Aberdeen
AB10 1BR
Julius Baer & Co. Ltd
Freie Strasse 107
4001 Basle
Switzerland
Legal
Pinsent Masons LLP
30 Crown Place
Earl Street
London
EC2A 4ES
Memery Crystal LLP
165 Fleet Street
London
EC4A 2DY
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Registrars
Link Group
10th Floor Central Square
29 Wellington Street
Leeds
LS1 4DL
Registered Office
High Holborn House
52-54 High Holborn
London
WC1V 6RL
83
Annual Report and Financial Statements 2020OverviewCorporate GovernanceStrategic ReportGroup Accounts
Afentra plc
High Holborn House
52-54 High Holborn
London WC1V 6RL
+44 (0)20 7405 4133
info@afentraplc.com
www.afentraplc.com